One year in, Keir Starmer’s government is in turmoil

Open this photo in gallery:

A year ago this week, Keir Starmer was celebrating a sweeping election victory and vowing that his new Labour government would deliver change, a fresh era and responsive government in Britain.

But as he approaches the end of his first year as Prime Minister, Mr. Starmer’s government is in turmoil, and Labour’s popularity has plummeted so low that the party now trails upstart Reform UK, a right-wing competitor, in most opinion polls.

Mr. Starmer’s economic policies have failed to deliver much growth, the government’s finances are in disarray and he’s facing so much opposition from his own MPs that he has been forced to backtrack on several key measures.

On Wednesday, he had to fend off questions about the future of the Chancellor of the Exchequer, Rachel Reeves, who was in tears during a debate in the House of Commons.

“I don’t think many Labour supporters could have imagined quite how badly Starmer’s first year has played out,” said Tim Bale, professor of politics at Queen Mary University of London.

The government, he added, has “not yet got many concrete achievements they can point to, the Prime Minister’s and the party’s polling numbers are plumbing new depths, and the parliamentary party is in open rebellion. No one ever said government would be easy, but few believed it would get this bad this quickly.”

Open this photo in gallery:

The latest humiliation for Mr. Starmer came this week, when more than 120 Labour MPs threatened to vote against the government’s welfare reforms, which would have cut some benefits. The changes were finally pushed through the House of Commons late Tuesday, but only after Mr. Starmer agreed to water down the legislation so much that all of the proposed savings of £5.5-billion, or $10.2-billion, were wiped out. Even then, 49 Labour MPs voted against the changes.

Mr. Starmer had already reversed course on a plan to reduce eligibility for a winter fuel allowance paid to low-income pensioners after confronting a similar backbench revolt. That change was also designed to save money. The government is now scrambling to figure out how to pay for both policy reversals.

The Prime Minister has said funding for the welfare benefits and winter fuel allowance will be announced in the budget this fall by Ms. Reeves.

Canada, U.K. commit to trade talks after Carney and Starmer meet

But analysts say the Chancellor has little room to manoeuvre. She has promised not to raise taxes again after hiking several charges in her last budget. She also has to find money for the government’s plan to sharply increase spending on defence, and she has set several fiscal targets that give her almost no leeway.

After the recent climbdowns, “the government is effectively returning to the drawing board,” said Helen Miller, deputy director of the Institute for Fiscal Studies, a London-based economic think tank. She added that spending on social security alone will be higher than Ms. Reeves forecasted and departmental spending has been set – all of which means “tax rises would look increasingly likely,” she said.

Mr. Starmer caused more uncertainty on Wednesday when he sidestepped questions in the House of Commons about whether he would replace Ms. Reeves, who appeared to be crying at one point during the proceedings. Her office later said she was dealing with a personal matter, and Mr. Starmer’s spokesperson issued a statement saying: “The chancellor is going nowhere. She has the prime minister’s full backing.”

That did little to ease the sense of tumult in the government. “The PM might be keeping his options open at this stage, but the Chancellor is a strange choice to axe from a market perspective,” said Kathleen Brooks, research director at London broker XTB. She added that the prospect of replacing Ms. Reeves with a more left-leaning Chancellor had spooked financial markets.

Opinion: Make Britain great again? Keir Starmer is making Britain depressed

Financial issues aren’t the only challenges for Mr. Starmer. He recently caved to calls from Elon Musk and Reform leader Nigel Farage for a national inquiry into gangs that groom young women for sex. Mr. Starmer had said for months that enough work had been done on the issue. He’s also coming under pressure to address the record number of asylum seekers crossing the English Channel in small boats, something he attacked the former Conservative government for failing to tackle.

Mr. Starmer has managed to achieve some success on the international stage. He has negotiated a trade deal with India and reached a new economic understanding with the European Union. He’s also the only world leader who has been able to get U.S. President Donald Trump to reduce tariffs on imports.

Mr. Starmer still has four years before he must call an election, which gives the government time to turn things around. But Dr. Bale said there remain questions about his leadership.

“Is Starmer, his authority dented by the welfare-bill debacle and his ability to connect emotionally with voters still woefully inadequate, really the man to do it?”