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Sir Keir Starmer has launched another attempt to reboot his ailing UK government at a six-hour cabinet meeting, held against a bleak economic backdrop and crumbling public support.
The prime minister admitted his administration had been too slow, too cautious and risked being left behind by world events, telling ministers at a special meeting on Friday in Lancaster House: “We can either be the disrupters or the disrupted.”
At the end of a week which saw the Bank of England halve its growth forecasts for 2025 and the populist Reform UK party overtake Labour in a YouGov poll, Starmer’s allies said he had made “a passionate call to increase the pace of change”.
Starmer called for cabinet ministers to go “further and faster” in reforming public services and delivering growth and renewed his criticism of the civil service, saying that “caution is hard-wired into the way the Whitehall machine works”.
“My reflection is that while we are working away, the world is speeding up,” he said.
Starmer’s primary allies — chancellor Rachel Reeves and cabinet office minister Pat McFadden — delivered the same message: that ministers had to accelerate reforms to boost growth and dig the government out of a hole.
Reeves, who is under political pressure because of the UK’s dismal economic growth, told ministers that the grim BoE forecasts showed why public service reform was crucial, according to her allies.
Political gloom hung over Lancaster House as ministers were also briefed on Labour’s approach to a daunting set of local elections on May 1. A YouGov poll this week put Reform UK on 25 points, Labour on 24 and the Conservatives on 21.
Ellie Reeves, Labour chair, told ministers that the party’s best hope was to act as an “insurgent” given that most of the elections were being held in traditionally Tory shires, according to people briefed on the meeting.
Starmer, referring to the rise of Reform UK, said populists claimed to be on the side of working people but “all they offer is grievances, not solutions”.
McFadden told ministers: “We ran on a platform of change. We should not defend the status quo when it isn’t ours. ‘Change’ was our slogan for a reason.”
Ministers met for two hours of political discussions followed by a four hour formal cabinet meeting, as Starmer attempted to map a way out of the political and economic malaise that has settled over his government.
The BoE’s latest forecast is that GDP will grow by just 0.75 per cent this year — half its previous 1.5 per cent forecast — and unemployment will rise to 4.75 per cent. The bank also forecast inflation rising to 3.7 per cent by the middle of 2025, well above its 2 per cent target.
Some business leaders have argued that the government’s own decisions — notably a £25bn national insurance rise for employers in last year’s Budget — have exacerbated the problems facing Starmer.
The poor economic performance could force Reeves to further squeeze public spending if she is to meet her fiscal rules, with tensions already growing in the cabinet over where the axe may fall.
The chancellor’s allies are refusing to comment on warnings from some economists that she may have to announce curbs on spending or tax rises when new forecasts are produced by the Office for Budget Responsibility on March 26.
Reeves is holding on to the idea that the economic outlook is so bad that it will help her push through contentious measures intended to boost growth, including backing an expansion of Heathrow airport and sweeping away planning rules.
“Some of the coverage has been crazy,” said one ally of Reeves, referring to media reports of an economic crisis after a rise in bond yields in early January — subsequently reversed. “But it has definitely strengthened our hand.”
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