18 June 2025

Labour must show it can build a state fit for purpose

Fixating on the Reform threat won’t fix our British malaise.

Imagine a Britain of plenty. Imagine a peaceful, secure country in which most people got on and felt safe. Given the latest war news, this might seem a perverse place to start. But it’s what any decent government has to be thinking about with our future.

After the pivotal Spending Review on 11 June, there is a new fight on. It’s a fight for the survival of orthodox politics and the state as it has evolved since 1945. In a beaten-down country, it’s a fight for hope; for the very possibility of plenty and security.

Inside Whitehall it is being conducted at two levels. One is public and is the standard fare of politics – benefits, public services, immigration, tax. This race to convince voters covers everything from Liz Kendall’s welfare reform bill to Wes Streeting’s progress on NHS waiting times, and announcements coming soon on industrial policy and new towns.

It is familiar territory but no less treacherous for that. Just as the Treasury dusts off its hands after allocating capital and day-to-day expenditure with little leeway, along comes the fresh, very dangerous Israel-Iran conflict. It feels worringly, eerily like the prelude to the Iraq War, which ended so disastrously. The world in which Rachel Reeves finished her departmental negotiations is already history.

As I argued last week, at least Keir Starmer is showing signs of sharpening his politics as the challenge from Nigel Farage becomes clearer. In that context, his acceptance of the need for a national inquiry into grooming gangs is welcome.

But why so late, asks the opposition? Not, I think, because he has been bullied into it, or because of metropolitan squeamishness about race, but rather his stodgy enthusiasm for due process. For him, an official recommendation from Louise Casey is a different matter than a tweet from Elon Musk.

I’ve previously mentioned recent interventions in favour of Bridget Phillipson and Ed Miliband; a recent example is the careful recalibration of benefit cuts in Kendall’s welfare legislation.

Ministers understand voters are hostile to the ballooning numbers who say they are too sick to work. Even after the changes, Kendall is only slowing the rate of increase. But voters are also hostile to the withdrawal of benefits from people suffering serious conditions. Hence, new measures on ensuring they don’t have to be reassessed again, as well as providing the longest-ever transitional protection for those losing benefits.

This, plus all the measures to entice people back to work, will not prevent a giant Labour rebellion. One Downing Streeter says baldly: “It’s very tough and people will rebel.” But Starmer believes the reforms are necessary. If not now, then probably never.

But, look: so far everything I have described belongs to the familiar heart-sink of British politics. Nothing is about abundance. It’s all about the least worst, the cheerless dicing and allotting of never-quite-adequate resources, as ministers struggle to patch up a crumbling country.

Behind the facade there is a more profound fight going on about whether the modern democratic state is fit to govern at all. Farage would say the answer is no. And one of Starmer’s team tells me, “It’s quite unbelievable how unfit the state is to meet the crisis we have right now.”

Let’s return to my opening suggestion: the possibility of a relatively plenty Britain. Absurd, apparently. But Downing Street’s current hot read is by (my favourite podcaster) Ezra Klein of the New York Times. Written with Derek Thompson, Abundance: How We Build a Better Future opens by imagining life in California in 2050, with unlimited clean energy, plenty of affordable housing and good transport, and a brilliant healthcare system using life-extending medicines.

The authors’ point is that better liberal politics, and a more effective state, could bring us a world in which the staggering advances in the private stuff we like, from smartphones to cheap clothing, were matched by advances in the public realm. They write: “We need to build and invent more of what we need. That’s it. That’s the thesis… An abundance of consumer goods distracted us from a scarcity of homes and energy and infrastructure and scientific breakthroughs.”

W hat is really striking to a British audience is that many of the problems faced by contemporary California feel spookily “us”. They too have a high-speed rail project running years late, blocked by environmental impact assessments. They too have an appalling shortage of affordable housing. They too have a growing homelessness epidemic. So, the deeper crisis is not simply a British problem.

But it is a deep one. In Downing Street, the actual inability to build makes ministers think there is a deep blockage throughout the system: “The centre is weak, and we are doing a lot of work to strengthen the Cabinet Office and No 10 to make it leaner and more agile.” The Cabinet Office Minister, Pat McFadden, working with the policy chief, Liz Lloyd and the Technology Secretary, Peter Kyle, is battling to make the machine work better. One worry is that they are surrounded by far too many press officers, trained for a lost age, and far too few data scientists. There are, for instance, some 4,500 communications people working for arm’s-length government bodies, often criticising the state, and another 2,500 working for departments, defending it.

Alongside this, years of underinvestment in capital equipment has produced an acute public-sector productivity crisis. The NHS is working at 20 per cent below its pre-pandemic productivity level. Similar points can be made about policing and the benefits system.

Blockages everywhere; Abundance highlights the paradox that laws introduced to improve the environment are now being used to stop housing and cleaner energy. Surrounded by blockages, ministers are adopting the motto “test, learn and grow” – don’t do big reforms until you have worked out what will work gingerly.

“We are only at the foothills of this,” says a senior minister. “The huge challenge for all government departments is how to make the state go faster. This isn’t about useless bureaucrats – bad systems will defeat good people all the time.” So, the planning reforms, and big investment in AI, are seen as crucial to making the British state faster.

But this, as much as the day-to-day politics, is a race against time. “We are living through a crisis of the democratic state,” says a minister. It is a battle to persuade people that politics can still work for them: “This is a problem in all complex societies with multiple points of veto. It’s a democratic problem. A party gets elected and says it is going to do this or that. And then it doesn’t happen because the system is so slow and so blocked.”

And then you get voted out. When people say that Starmer is fixated on the threat from Reform, this is the pith of the matter. Downing Street is right to feel that there is something more fundamental going on, something more important than individual fights over individual policies. It is the spreading perception that democratic politics is failing.

There is nothing abstract about it: this is about the failure, so far, to build more of the public realm we need, alongside all the week-by-week firefighting and daily headlines. The people at the heart of the machine understand the scale of the problem. Perhaps it’s not much. But that at least is true.

It is still possible that the decent people throughout the Starmer government making the long-term investments and reforms Britain needs will also fail so badly in the daily struggle with inadequate resources that they cannot, in four years’ time, hold back autocratic populism. But at last a proper struggle for a Britain of plenty has begun.