Starmer's perfect storm The rot in Labour runs deep

From the moment he entered Downing Street, Keir Starmer has been running a shadow government. Elected for no other reason than it was the opposition, his administration has governed from a cave, oblivious to the outside world where an angry electorate sees that the political class cannot govern. Instead, for Starmer, an alternative political crisis has gripped the country: caused by the voters and aided by Labour members. In this Starmerworld, Labour cannot be held accountable for anything that is getting worse because it was the voters who allowed the Conservatives 14 years to inflict their harm, all while he was too busy saving the Labour party to prepare for government.

Having finished a poor third in the Gorton and Denton by-election, the Prime Minister is again blaming voters — this time for falling for the Greens’ divisive sectarianism. Even as oil traffic through the Strait of Hormuz collapses after the bombing of Iran, jeopardising vital imports, it is impossible for light from the outside world to penetrate the passivity of his consciousness.

But the realities that have crushed the British political class render the outcome of last week’s by-election a bigger event than the cataclysmic mismatch of Starmer’s ambition and his utter unsuitability for political office. The four political forces that destroyed Labour in Gorton and Denton originally materialised during Tony Blair’s second term, and neither Labour nor the Conservatives has ever really recovered.

From the moment he entered Downing Street, Keir Starmer has been running a shadow government. Elected for no other reason than it was the opposition, his administration has governed from a cave, oblivious to the outside world where an angry electorate sees that the political class cannot govern. Instead, for Starmer, an alternative political crisis has gripped the country: caused by the voters and aided by Labour members. In this Starmerworld, Labour cannot be held accountable for anything that is getting worse because it was the voters who allowed the Conservatives 14 years to inflict their harm, all while he was too busy saving the Labour party to prepare for government.

Having finished a poor third in the Gorton and Denton by-election, the Prime Minister is again blaming voters — this time for falling for the Greens’ divisive sectarianism. Even as oil traffic through the Strait of Hormuz collapses after the bombing of Iran, jeopardizing vital imports, it is impossible for light from the outside world to penetrate the passivity of his consciousness.

But the realities that have crushed the British political class render the outcome of last week’s by-election a bigger event than the cataclysmic mismatch of Starmer’s ambition and his utter unsuitability for political office. The four political forces that destroyed Labour in Gorton and Denton originally materialized during Tony Blair’s second term, and neither Labour nor the Conservatives has ever really recovered.

The first of these, and the overriding one, is the deterioration in Britain’s economic performance. In her victory speech on Friday morning, the new Green MP for Gorton and Denton, Hannah Spencer, said that she did not think “it’s extreme or radical to think working hard should get you a nice life”. Once “working hard … g[o]t you something … a house, a nice life, holidays. But now, working hard, what does that get you?”

It was apt language. As the former Governor of the Bank of England, Mervyn King, foresaw two decades ago, the years of “NICE” – Non-Inflationary Continuous Economic Growth – are long over.

Rising Asian oil consumption driven by China’s economic transformation ended the relatively benign world economic conditions that prevailed between the mid-Eighties and the early 2000s. As oil and gas production in the North Sea declined, Britain was particularly vulnerable in the emerging energy world.

From 2004, Britain became a net energy importer. To manage a structural energy-shaped trade deficit without dependence on volatile international capital flows, a state needs a strong export base. But Britain had a de-industrialized economy and was already running a sizable trade deficit. The past five years of high gas prices have accentuated this weakness. Without coal or hydropower, and with a declining nuclear sector, Britain is highly dependent for electricity on importing natural gas. Amplified by policy and network charges, our industrial electricity prices are the highest of any G7 economy. This burden has decimated the chemical sector, and contributed to Britain registering a record trade deficit in goods in 2025. A report by the CBI and Energy UK, published this month, reported that 40% of manufacturing firms have cut back investment because of high energy costs. Without some relief, NICE retreats ever further into the past.

The second force at work against Labour in Gorton and Denton was the penetration of British politics by the Middle East. Across the coalition mobilized by the Greens, Gaza hurt Labour, just as the Iraq War helped lose Labour 11 seats to the Liberal Democrats at the 2005 general election — including Manchester Withington, one part of which is now in the Gorton and Denton constituency. A year later, Israel’s invasion of Lebanon was the inciting incident for Tony Blair’s early departure from office.

As strong support for Israel was part of the New Labour project, that internal party coup was a symbolic moment. Perhaps it is no coincidence that Starmer’s attempt to replicate Blair’s playbook in opposition, by staging a confrontation with the Left of the party, centered on suspending Jeremy Corbyn over antisemitism. But as progressive politics since Iraq has been bound to objecting to Israeli and US policy in the Middle East, Israel’s response to Hamas’ October 7 attacks casts a very long shadow. A Labour government cannot sit in the position New Labour did when there was genuine hope of a two-state peace settlement between Israel and the Palestinians without shedding votes to its Left. Nor can it chase those votes without the risk of embroiling Labour again in the antisemitism crisis of the Corbyn years.

The third long-standing force punishing Labour in Gorton and Denton is the graduate debt borne by the millennial and early Generation Z urban precariat. Labour has had problems with university tuition fees since 2004, when, having ruled out any change to university funding in its 2001 manifesto, Blair’s government legislated for English universities to charge up to £3,000 a year: from 2006-7, students would pay by loans, rather than the previous means-tested upfront charges. Labour’s majority on the bill was five, with Scottish Labour MPs delivering the necessary votes, even though the fee regime would only apply in England. While it was the Liberal Democrats who took the political blame for the next hike in tuition fees, in 2012, it is the young graduate voters wishing to identify with Labour who bear the brunt of this fee regime — and which has, with higher inflation, resulted in higher interest loans.

If this cohort were not already resentful enough, the Chancellor’s last budget froze the threshold for repayment for three years to patch up the fiscal gap caused by the welfare debacle in the summer. Starmer and Rachel Reeves’s presumption that these voters have nowhere else to go has been blown apart by Zack Polanski’s leadership of the Greens. Indeed, with graduate urban millennials having constituted the social base for Corbyn’s movement-based Labour party, the Greens are now the very version of Corbyn’s Labour that Starmer thought he had slain — this time with the right generational leader for the cause.

The final force at work is the one that delivered Reform 28.7% of the vote in inner-city Manchester. Quite simply, Labour can no longer be the party of the working class. For two decades the party has tried to face both ways or, more precisely, danced one way and then, shortly after, the other, on those issues that have alienated much of the working class from both main parties. Blair’s second government was sufficiently complacent about these voters to eschew transition arrangements for the right to work in Britain of EU citizens from eastern Europe, even as it was sufficiently worried about rising Euroscepticism to offer a referendum on the constitutional treaty. Since Shabana Mahmood became Home Secretary, Starmer’s government has moved quite decisively on migration and asylum, but she cannot win the argument in Labour that she is right to have done so.

Come May, whoever will be leader of the Labour Party has two forms of nostalgia on offer: try to restage the Brexit referendum, as is Starmer’s obvious aim; or take up Polanski’s tacit offer of a “progressive” alliance as a backdoor return to the domestic and foreign-policy Corbynism. Each is an attempt to escape from the realities that face Britain: a deindustrialized economy highly dependent on inward international capital flows that cannot offer high earnings, or home ownership, to those many millennial or Generation Z graduates, and the decline of Europe in a world of great power competition between the United States, China, and Russia.

Britain cannot reset relations with Europe by dint of one faction in the political divide using the issue as identity politics. Treating the EU as a means to bash the Conservatives, while simultaneously opting out of anything in EU membership that was too demanding, was one of the ways by which New Labour opened a path to Brexit. Either British politicians accept what is required to integrate with the EU and find a way of persuading a broad coalition of the electorate of its merits, or they have to work out a serious alternative European strategy that engages with US, Chinese, and Russian power.

However deeply a set of British voters cares about what happens in the Middle East, Britain cannot influence US or Israeli policy. Starmer’s unwillingness to let the US use the Diego Garcia airbase or RAF Fairford for the initial attack on Iran made no difference at all to the outcome. Grandstanding with Washington, and then equivocating afterwards about the Iranian regime’s fate, is no strategy for deciding what approach to take to the US-China-Russia competition in a world in which the Trump administration is laying assault to China’s energy vulnerabilities and bidding to reopen Russia for US oil companies.

Under Polanski, the Greens have an answer to the geopolitical question Starmer evades: break with Washington and leave Nato. But the corollary of that for any European state has to be accommodation with Russia over Ukraine, closer ties with China in the tech and resource war, taking more responsibility in the Red Sea, and ending energy dependency on the US. The first two are not appealing to at least parts of the progressive coalition, the third to any section of it, and the last would presently be impossible without a reset with Russia.

Where energy is concerned, there is a Green vacuum. In the 2019 general election, a Green New Deal to achieve an alternative energy system that realized net zero carbon emissions during the 2030s was the centerpiece of Corbyn’s Labour. Polanski calls himself an “eco populist”, but any such ambition was near entirely missing from the Greens’ campaign in Gorton and Denton.

Whatever the attempted distractions, energy is where the underlying material reality of the British political crisis can no longer be avoided. If the next election is heading for an identity and generational contest between Left and Right coalitions, in which the Greens and Reform define the stakes, Net Zero as an energy strategy will be a consequential substantive divide. As much as it was driven by climate change, Net Zero 2050 was a bid to solve Britain’s problem of foreign energy dependency and the burden that creates for a deindustrialized economy. But as a legal commitment, Net Zero constrains policy-making in the energy world as it is, and insulates decisions from voters’ worries about the cost of living. Britain cannot substitute wind and solar for gas on an hour-by-hour basis without grid-level storage, and it cannot electrify much of present hydro-carbon consumption without subsidies for electric vehicles and a housing stock better suited to heat pumps.

The fantasy that the British economy can grow faster without a realistic energy policy is causing another round of deindustrialization. Britain can prioritize Net Zero for climate reasons or it can have an energy strategy. It has been another of the deceits of Starmer’s administration that there is no choice to be made. Already, former Labour ministers and the Tony Blair Institute for Global Change are calling for drilling in the North Sea to be kept going for as long as possible. Now, as the fallout from Iran spreads through oil markets, those demands will intensify. There is no escape from choosing. Accelerated by events that no British government can meaningfully influence, the next act of our political crisis will likely force the long-coming energy reckoning. If, come the summer, the Labour leader, guided by Gorton and Denton, follows the Greens, the party will push what remains of New Labour, however unpalatably, to the same side as Reform in a battle over Net Zero.

There will be no putting Labour back together again, any more than there has been a remaking of the Conservatives after their humiliation in 2024. There never was a way back to the old version of NICE, any more than there was a way to reinvent the entire energy base of Britain within three decades. What is still required is a path forward informed by the real world within and beyond.