A new political era has begun. July’s cataclysmic election still left the UK stranded between the past and the future. Labour struggled to achieve political definition despite its landslide victory; Rishi Sunak continued to lead the Conservatives – and was even called “prime minister” by Keir Starmer.
Rachel Reeves’s Budget and Kemi Badenoch’s election as Tory leader have ended this phoney war. The former made clear in word and deed that the UK is under new economic management. Public spending will settle at 44.5 per cent of GDP – its highest sustained level in history. Taxation will reach a record high of 38.2 per cent (putting Britain closer to the European social democratic norm).
Reeves has inverted the Conservative mantra that strong public services depend on a strong economy. “Successful businesses depend on successful schools. Healthy businesses depend on a healthy NHS,” she declared in her Budget – a distinctively centre-left argument.
Badenoch’s pitch is notably more radical. Unlike Liz Truss, the new Tory leader does not merely want to cut taxes and regulation. She wants to neutralise an entire “bureaucratic class” – liberal lawyers, HR managers, university staff – that stands accused of “strangling growth” as well as damaging society. In this sense, her agenda is far closer to the radical spirit of Thatcherism than Truss’s often parodic libertarianism. Badenoch understands how the late Tory prime minister drew strength by waging class war from the right – against militant trade unionists, industrial corporatists and patrician Conservatives.
Should Labour fear this new iteration of Toryism? Despite some reports to the contrary, it does not – for now. No 10 aides believe that Badenoch has made two early errors. The first was her refusal to distance herself from Liz Truss – whose legacy remains electorally toxic for the Conservatives.
“We can have a post-mortem on each and every prime minister over the last 14 years, but I don’t think that’s particularly helpful for your viewers,” Badenoch told the BBC’s Laura Kuenssberg. Though she emphasised “there will be a post-mortem”, leaders don’t get a second chance to make a first impression (not least when the world’s hegemon is about to elect a new president). When even Kwasi Kwarteng is happy to critique his own mini-Budget, Badenoch’s refusal to do so baffles Labour.
Her second error, advisers say, was to oppose the imposition of VAT on private school fees, thus gifting the government the dividing line it wants on public service investment (Reeves pointedly noted in her Budget that 94 per cent of children attend state schools). “We’ve seen a lot of Tory leaders,” a No 10 aide observed (Badenoch is Starmer’s fourth). “We’ve set out our stall. They need to fundamentally change as we did.”
But others in Labour say Badenoch has already passed what you could call the Oscar Wilde test: remembering that the worst thing is not being talked about. Luke Tryl, the executive director of the think tank More in Common, supports this view.
“During the Tory leadership campaign we did lots of focus groups, Kemi was the candidate where people would say ‘oh she’s quite different isn’t she? Honest, direct, I want to hear more’, which is the key for me because when you’re in opposition that’s the question you’re answering: ‘how do I get people to actually listen to us?’” The challenge for Badenoch – as with her ill-fated comments on maternity pay during the Conservative conference – is that voters may not always like what they hear.
But Labour’s early unpopularity and a new era of electoral volatility could aid her cause. Anti-incumbency, Tryl pointed out, is currently the best predictor of election results – with South Africa (where the ANC lost its majority for the first time) and Japan (where the Liberal Democratic Party suffered the second-worst result in its history) only the most recent cases.
Rather than fearing Badenoch as such, what Labour MPs fear most is simple failure. The government is raising taxes and borrowing on the promise that stronger public services and higher growth will follow. If they do not, voters may be open to alternatives. Badenoch’s belief that the UK needs a new model, rather than just a new government, could leave her ideally placed to capitalise – or it could consign her to the margins.
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