Oh Keir! Labour’s torrid first year

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0:55The Economist.

1:02Hello and welcome to The Intelligence from The Economist. I'm your host, Rosie Bloor. Every weekday, we provide a fresh perspective on the events shaping your world.

1:17This week, Bangladesh's former Prime Minister Sheikh Hasina was sentenced in absentia to six months in prison by a domestic court. Nearly one year after she fled the country, our correspondent analyses how its new leader is doing. And say Ferrari, and we can all summon up the slick, super-fast car. Not quite so many of us actually own them. And given the cost, most of us never will. So how is the company still doing so well?

1:53But first

2:02It's been a humiliating week for Britain's Labour government Elected in a landslide and promising radical renewal It's since had to scrap many of its plans To save money or to get its own party to back it Labour MPs backed what was supposed to be one of the government's flagship welfare reforms but only after ministers stripped out its most controversial elements What just happened in there at the 11th hour in front of MPs' very eyes were ripping out bits of the bill, folding on all of their planned changes really That torrid week came at the end of its almost equally torrid first year in power The Prime Minister, Sakhir Starmer, had promised change and control.

2:46Countries only come together, truly come together, behind ideas, a shared purpose, a national project for a better future. And right now, there's an idea in this country that desperately needs renewal. The idea that this country still works for those who work hard for this country. But so far, he's a long way of delivering that. The verdict so far is that Labour is making dreadfully slow progress towards its targets. Matthew Holhouse is our British politics correspondent. And the public is not impressed. Labour's support has fallen from 34 to 24 % in just one year. And James Fransham is a data journalist with The Economist.

3:31And that puts them about five percentage points behind Reform UK, an insurgent party on the right of Britain's political spectrum. Matthew, let's start with this week. It's been a dreadful one for Labour. What's happened? It really has been the unhappiest first birthday party. So over the past week, the government was forced to gut its bill, which would have cut the benefits paid to disabled people and people with ill health after this pretty enormous rebellion of its own MPs. That U-turn wipes out pretty much all the savings that had been contained in the bill. And it follows an earlier U-turn by the government having cut the payments paid to old people to pay their heating bills in winter.

4:16That was very unpopular, so they reversed that. And then this week we saw Rachel Reeves, the Chancellor of the Extreca, shed tears in the House of Commons at Prime Minister's Questions, the big parliamentary event of the week. Now, these are really horrible images for the government in their first year of office. But they also reflect something much, much deeper in the government that is amounting to something of a crisis in how they govern. So let's talk then about that first year. Labour promised to fix broken Britain. How has it tried to do that? So in the general election, Keir Starmer set out what he described as three foundations.

4:54So the basics that you could always rely on the Labour Party to get right. One of them was economic stability after the real volatility under Liz Truss, the short-lived Conservative Prime Minister. But the economic outlook for Britain is pretty challenging. Economic growth in the five years before they came in office had been 3.6 % compared to 12.7 % in America. Inflation remains above the Bank of England target of 2%. The cost of British government debt is at a 17-year high. Okay, so economic stability is foundation one. What's number two? Yes, so the Labour Party went into the election talking about secure borders, which was basically a synonym for controlling immigration, reducing regular migration and bringing under control irregular migration.

5:45So looking at regular migration, in 2024, net migration, so the people arriving to the UK minus those leaving, fell by half to 430 ,000. Now, that was a pretty sharp drop, but it was kind of always going to because that big increase in migration was partly driven by flows of people from Ukraine and Hong Kong, but also a liberalization of visa policy, which had then been reversed by the conservatives. But nonetheless, if you're a party of government who wants to reduce migration, those figures were good news for them. On the irregular migration side, the outlook is much trickier for the government.

6:24So the most acute and obvious problem is that the crossings of people in small boats across the Channel from France continue. And there is still a large backlog of asylum seekers whose claims are still being processed. Now, what that means is that those people under the law are required to be housed somewhere. where many of them are staying in former converted hotels. And that is often pretty unpopular with the people who live in those communities. And Matthew, what about foreign policy and national security? Keir Starmer's been quite keen to show that Britain can punch above its weight and increase defence spending.

7:00What's going on with that? Yes, so there's a pretty broad consensus in Westminster that Keir Starmer's played a pretty deft hand on this with an incredibly challenging backdrop. So he appears to have nannied with some degree of success. President Donald Trump managed to alleviate some of the worst of the tariffs that were applied to the UK as part of Trump's tariff policy. A huge amount of effort behind the scenes to establish with Donald Trump that the UK is a good ally of the United States and they've got many shared interests. He certainly has warmed relations with the European Union as an institution, but also with individual European countries.

7:35So that's a combination of bilateral relations, particularly with France and Germany, but also what was termed a reset. So there's been a substantial but still in the round fairly moderate liberalisation of the trade relationship with the EU. So some of the sharp edges that came out about the result of Brexit have been shaved off. And the third big front of this is defence spending. So Starmer's made some pretty huge commitments on this. Open question about whether they're enough given the world that we live in. But it is true that defence spending is going to increase from 2.3 to 2.6 % of GDP by 2027 and aim to raise it to 3.5 % by the middle of the next decade, 5 % if you include resilience and security.

8:16James, a lot of those policies and plans are quite abstract for most people. So how are they going down with the population? Yeah, I think the first question would be you might want to set targets for political purposes. You might want to set targets to deliver change through government. but do they actually resonate with voters? And that's the question we want to ask kind of front and centre. So to do that, we did a focus group with More & Common who are a polling firm. I sat in on that. There were eight Labour voters from last July and it was very illuminating insofar as that no one really heard of any of the missions or milestones or foundations.

8:50A few had kind of got through to one or two people. So the house building target of one and a half million homes, for example. But one of the milestones is to recruit 13 ,000 new neighbourhood police. And so, yeah, focus group doesn't really get it. Then we did some national polling and we said to people, OK, thinking about, for example, transport, what's the kind of one metric that if it was achieved would basically increase your propensity to support the government to the next general election? So what did the polls show? So we gave people a suite of options. So with respect to transport, we said, like, would it be more road building?

9:23Would it be reducing times on trains? Would it be fewer potholes? Guess what? It's fewer potholes. That was the most popular metric. So with that, we kind of narrowed that down to eight metrics across these domains, transport, environment. With respect to growth and income, it's their pay packets, not GDP growth that matters most of them. With respect to house building, they just want more houses. So we've got these kind of eight domains and then we've gathered them all together and we've gone back to 2019. So we get a sense on these kind of populist measures, how the government is performing.

9:54The answer is not great, basically. So you've set up the Starmer tracker to see how Starmer's doing, how Labour's doing. And from that, what can you see about where Labour could actually manage to make some wins? The one that matters most in terms of swinging votes would be on energy. An overwhelming 54 % of respondents to our poll said that actually they just want lower energy bills. And what about the NHS? NHS is super salient, yeah. Within the NHS domain, what was the most important one was the most salient one, actually it was emergency department waiting times. So there the NHS has a target that 95 % of people will be seen within four hours.

10:34Currently, it's about 60%. So it's way down. It's not been met for 12 years. But that's the goal that most voters would like the government to meet. Labour had so much time to prepare for office. So it seems astonishing, really, both how little they've done, but how fast and how far their popularity has fallen. Why is that? Yeah, the kind of underbaked question is one that I think we've bounced around a lot in the Britain team. And the plan for change not being released until December is, who knows? And then I think in terms of the policy stuff, a lot of stuff has followed from the spending review that happened a couple of weeks ago.

11:12So a lot of government departments were waiting in order to find out what their settlement was and then to make long term changes. I defer to Matthew's judgment on the politics of planning. Obviously, Rishi Sunak called the election a bit sooner than we all expected, but I don't think that's any excuse. I'm going to be much crueler than James on this. There has been so much excuse making. You know, Rishi Sunak called the election three months earlier than we thought. Sue Gray, the Prime Minister's Chief of Staff, wasn't up to snuff. The truth is this. The last time that power has changed hands in this country, in 2010 when the Conservative Coalition under David Cameron came in and before that Labour under Tony Blair in 1997.

11:54Both those times, those were parties that, after a long spell in opposition, had a deep analysis of what was wrong in their view with the state and the British economy. And they had a project that flowed across every frontier of policy. And within the first year, if you look through the records, you see that in the first year of those administrations, You have a cascade of bills, like a stack of telephone directories slamming on a desk. Kirsten's administration, who told a very compelling story about how these guys were the technocrats. These guys were, you know, the competent people who thought really deeply.

12:27They might be boring, but my goodness, there was a lot going underneath the hood. Did not complete that analysis. They barely began it, frankly. And they enter office just remarkably unprepared. But there was a genuine belief amongst some ministers that it was the job of the civil service to come up with policy. And they would walk in and the civil service would present them with policy ideas, which is not its job. And some of this was a legacy of the fact that he went from turning around the Labour Party, which was a bit of a smoking wreck after Jeremy Corbyn, to an organisation that was fit to win more than 400 seats in the space of five years.

13:02So it was just a speed thing. But it was also downstream of an electoral strategy, which spoke of a small target that said, And abundance of caution means that we just won't do the intellectual ranging because it's dangerous. Because, you know, if you do that, then you start to think thoughts that might be unpopular. So you just keep it really sort of retail focused and you come up with these very small popular pledges, you know, shorter NHS times, more coppers on the street. You don't get into the systemic analysis. And so so many of the challenges they've had are downstream of that failure. The other failure is that they just don't confront properly the existential challenge that this party has, which is that they are social democrats.

13:40Their MPs want to deliver a more generous state. They want to invest in public services and infrastructure. But in a world which is radically different to 1997, a world of high public debt, where the tax burden is already high, and we've got really, really low growth, and they have never confronted what it really means, really, really means to be an austerity Labour Party. And really confront that dilemma of do you have fiscal restraint or do you raise taxes across the board? And until they resolve that, they are just going to exist in this permanent state of internal conflict. So that's why it's so bad.

14:18Matthew, James, thank you so much. Thank you. Pleasure. And you can find more on our Starmer tracker in the Britain section of economist.com or via our app.

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15:19Capital One's tech team isn't just talking about multi-agentic AI. They already deployed one. It's called Chat Concierge and it's simplifying car shopping. Using self-reflection and layered reasoning with live API checks, it doesn't just help buyers find a car they love. It helps schedule a test drive, get pre-approved for financing, and estimate trade-in value. Advanced, intuitive, and deployed. That's how they stack. That's technology at Capital One.

15:53Around this time last year, streets of Dhaka were on fire.

16:00Tens of thousands of students flooded into Bangladesh's capital. Vishnu Padmanavan is our Asia correspondent. They were demanding the resignation of Sheikh Hasina, the country's authoritarian leader. The protesters were fed up with her and her party, the Awami League, accusing them of corruption, rigging elections and using force to crush dissent. And on August 5th, 2024, they got what they wanted.

16:30Hello and welcome back. In a dramatic turn of events, Sheikh Hasina has fled Bangladesh following severe unrest, leading to her outsting and a takeover by the military. An interim technocratic government, led by Mohammed Yunus, a Nobel Peace Prize winner and national hero, took office. He promised to restore order and rejuvenate democratic institutions that years of misgovernment had ruined. But nearly a year on, Bangladesh's new dawn is clouded by uncertainty. I went to Dhaka to see how far the country has come since those protests and to meet the man tasked with getting the country back on track.

17:14It's been 11 months since the interim government came into power and it's not been easy.

17:28not just one shot earthquake, 16-year-old continuous earthquake. After years of misrule, Bangladesh was in rough shape. Institutions were hollowed out, corruption was everywhere, and state violence had become routine. The economy, once a bright spot, had begun to lose steam. About one in five young people were out of work. And even with the wave of relief that followed Sheikh Hasina's downfall, anger at her government and its backers was still simmering. But amid this chaos, the interim government has made some progress. We are rebuilding the whole foreign exchange reserve. We have almost paid back all the dues and international payment that we have to make out of our own resources.

18:14And our internal reserve is increasing enough to give us confidence that we can move on. And the economy is gaining strength. The economy is still sluggish, but it has avoided collapse. Reforms to clean up the banking sector are working, and multilateral lenders like the IMF have approved big loans. On the political front, though, the situation is messier. The interim government has embarked on an ambitious reform process. It is working with various political parties to come up with measures to prevent the country from sliding back into authoritarianism again. The plan is that these ideas will be put in place before elections are held early next year.

18:54I think we are right on. We're moving in the right direction and people are with us. We are hopeful, we are optimistic. Things will work out the way we planned. Yunus is hopeful, and he has to be. But it remains unclear if the reforms will happen or what they will entail, especially when different groups are demanding different things. On the streets, protests have become routine as parties and groups press their claims. One common demand throughout has been to ban the Awami League. In May, the interim government caved into this pressure by banning the party from all political activity. This means it will not be able to participate in next year's election.

19:40Meanwhile, the students who helped bring down Hasina have formed a new party, the National Citizen Party. NCP election! A few weeks ago, I made my way to a NCP rally held in the heart of the city. I spoke to a man called Abir. What do you like about NCP? The nation, right now, it's youth. So you have to understand their mind. If you can't follow their passion or their thoughts, as a government, you will be failed. He's a 25-year-old student. One day, he dreams of working in IT. When asked if the interim government can deliver on their promises, Abir was doubtful. The government is not in a stable shape right now.

20:27And the policy makers, everything is kind of an unstable position. If it comes back under NCP government, I think they will do so much better. Another man I spoke to was worried about a return to corruption and the type of repressive regime they experienced under Hasina.

20:52That is a legitimate concern. According to recent polling data, the new student party enjoys little support across the country. Less than 10 % of Bangladeshis say they would vote for them in the upcoming election. Instead, the front runner is a party of the old guard, the Bangladesh Nationalist Party, which was the Avami League's main opposition. But many feel that the BNP operates in the same way as the Avami League. When it was in power many years ago, it too faced accusations of corruption and repression. The interim government, though, insists that it can prevent this by rebuilding institutions and that there will be a new Bangladesh.

21:28We take responsibility of the government. We also take responsibility of the aspirations of the people, expectations of the people. And that's sky high. There is excitement around this democratic awakening. But there are worries that Bangladesh is sliding back to old ways. For example, just a few weeks ago, a former election commissioner was attacked by a mob. He was accused of rigging the 2018 election for the Awami League. It's the type of behavior the student movement fought against. To avoid sliding back, many believe the interim government needs to take a more inclusive approach, starting with unbanning the Awami League and letting it contest elections.

22:11That will be painful for many Bangladeshis. But not everyone in the Awami League is tainted by crimes. and the Awami League is the country's oldest party with considerable support, especially from minority groups. These voters deserve the right to choose whoever they want. There have been plenty of false dawns in Bangladesh's history. After independence in 1971, it took just four years for the euphoria of Bangladesh's first liberation to be snuffed out in a military coup. This second Bangladesh liberation will hopefully endure longer. But for that to happen, it'll require reconciliation, not revenge.