Starmer disaster

One year of Labour. One year of disaster. From the freebies scandal to the winter fuel debacle, from Starmer mimicking Enoch Powell’s “island of strangers” to then apologising for it, from the backbench rebellion over welfare cuts to chancellor Rachel Reeves in tears in Parliament—this has been a slow-motion train wreck which feels like a bad episode of The thick of it, only without a Malcolm Tucker to make us laugh. And now, with the economy stagnating, public services collapsing, inflation climbing and public debt soaring, the government has to produce a budget this autumn. No one knows how it can dig itself out of such a massive hole. As if things were not bad enough, Angela Rayner just resigned in disgrace for dodging stamp duty.

Why is the Starmer government so impotent? It is not only incompetence or poor PR. Something more fundamental is at play. British capitalism is confronted with a crisis, and Starmer is incapable of solving it because he is torn by irreconcilable contradictions and class forces pulling in different directions. These have sunk the government in an intractable quagmire, paralysing it as Reform UK circles for the kill. For leftists now trying to build Your Party, it is essential to understand this dynamic.

Starmer’s quagmire

Britain’s economy is stagnant, and the City of London and big businesses are growing restless. To stay afloat, they need tax cuts, deregulation and a more “business friendly” environment: lower wages, state subsidies and privatisations. This is how hedge funds keep raking in profits, which is what passes for “growth” in modern Britain. Furthermore, with Trump back in power, the US is tightening the screws on its allies, demanding increased military spending (to buy US-made weapons), better terms for American companies and stricter obedience to US foreign policy.

But to buy F-35s, cut corporate taxes and subsidise companies requires money—and the government has none. Public debt is soaring, and higher interest payments are devouring ever larger chunks of the Treasury’s budget. More borrowing at this point risks financial instability. The only options for the government are to cut public spending—benefits, education, public services, etc—or raise taxes, which are already at historic highs. The rich will not accept another tax rise, and since Starmer is desperate for their approval, Labour will have to turn to the middle and working classes and squeeze more out of them. Concretely, to do the bidding of the City and toe the line for the US—which is what Starmer promised to do—he needs to impoverish and attack large layers of the population.

But the problem is that Starmer cannot do that. Most of the population is restless, choked by sky-high energy bills, bloated mortgages and stagnant wages. Public services are already on the brink of collapse, leaving little left to cut—short of mass NHS privatisation. But not only is this widely unpopular, the government is so despised that it has no political authority to preside over any important cuts and attacks on working people.

Crucially, Starmer’s paralysis lies in the Labour Party itself. Starmer crushed the left in the party—his only real achievement. But in doing so, he also hollowed out the base of the party, forcing those that were not purged to swallow blow after blow against the very idea that Labour had anything to do with the working class. Yet, Starmer cannot evade it: the source of his power, the Labour Party, remains the main obstacle to fully embracing the interests of the City.

This was most clearly seen with the backbencher revolt against the proposed £5bn cuts to benefits. Everyone could see trouble brewing in Labour. Yet, Rachel Reeves pressed ahead, desperate to prove how “tough” she is. Starmer, meanwhile, spent most of his time jetting to summits on Ukraine and could not care less. They probably thought there would be no problem—after all, most Labour MPs are obedient toadies, hand-picked by Labour HQ for their cowardice.

But over a hundred MPs did rebel. Not out of courage or as a result of a left-wing upsurge, but because they knew that ripping away the crumbs from sick and disabled people would sink their already fragile re-election prospects and cut their career short. They could hardly face their union backers, NGO sponsors, or—worst of all—their impoverished constituents if they voted for it. In a sense, their narrow careerism forced them into a confrontation with the party tops. The reform collapsed—and with it, the government’s credibility in the eyes of the City, washed away with the tears of Rachel Reeves.

The result is that Starmer is stuck in the muck. Stuck between his commitment to the City and the seething anger of working people, able to satisfy neither. For a year, the government muddled through: giving a little bit to the City, a little bit to workers, tinkering with the books while praying that the next growth forecast would be slightly higher. But now, the government’s goal is simply survival.

We cannot know how long it will last. It is possible that it muddles through a little longer, particularly if the impending financial crisis is delayed. However, rumours of a £50bn hole in the budget are growing, alongside warnings that Britain might need an IMF bailout—which would be a catastrophe and humiliation for the ruling class. But behind this chatter is the very real possibility that the City might crack the whip on this government much harder than it has until now. So far, Starmer’s only luck is that there isn’t a viable alternative to him…yet.

The rise of Reform

Meanwhile, the main political force taking advantage of this disaster is Reform UK, which now tops the polls. Reform’s strength lies in its ability to channel the deep anger in society into anti-immigrant sentiment, something at which it is particularly successful in working-class areas and former Labour strongholds, where bitterness runs deepest.

In many ways, Reform is a product of the rottenness of British capitalism. As society stagnates, as living standards fall and as everyone fights over crumbs from a shrinking pie, Reform provides a clear outlet for this massive anger. This is rendered easier by the fact that the left has spent decades defending the very liberal values and institutions used by the ruling class to crush working people, shut down industries and bring high levels of immigration. Thus, not only are liberal demonstrations and moralist appeals to love refugees useless in quelling the right, they feed it (see “How not to fight the right”).

Unsurprisingly, Labour’s answer has been to copy Reform, a disastrous course which has only succeeded in boosting Farage while further angering Labour’s base. Reform voters, or even most who look to Tommy Robinson, are not irredeemable racists. Most are angry working-class people, looking for a fight with the liberal establishment and a radical alternative to the status quo. The fact that they find it in anti-immigrant bigotry is an indictment of the left, which has clung for as long as possible to the lackeys of the City.

While Reform is winning workers, a growing section of the ruling class is also throwing its lot behind it. Not because they are convinced of Farage’s plan, but out of lack of an alternative. The British rulers are also very sensitive to the political winds across the pond, which point in Farage’s direction. There is a hope among some that Farage’s ability to contain mass discontent and channel it against foreigners might enable him to do the overhaul the British state desperately needs, ie massive cuts in benefits and privatisations in the NHS.

That said, the majority of the ruling class are not quite ready to hand him the keys just yet. They remain wary of a sharp break with the post-War order, even if Trump is imposing one on them. They are also happy with high immigration numbers, which has helped to keep wages low and artificially grow the economy. This is why the anti-immigrant hysteria is largely focused on so-called illegal immigrants arriving, which number in the tens of thousands, and not on “legal” migration, which is in the hundreds of thousands. In this way, Reform wants to convince the City bankers that it can be trusted to protect their interests, that they will continue to profit from cheap “legal” immigrant labour as long as they need it, while cracking down on “illegals”, pitting poor people against each other and polarising the country along poisonous lines. The winner would be the City, obviously. And unless the political landscape shifts dramatically, Farage’s path to power looks straight and clear.

Who will confront the City?

This is the context in which the new party of Zarah Sultana and Jeremy Corbyn is being born. From the standpoint of the working class, the fundamental political problem in the current landscape is that there is no force willing to confront the City of London and go for its jugular.

The City of London is the cancer eating British society from within. The fact that the entire economy is organised around banking, financial wizardry and land speculation is the root cause of the housing crisis, the lack of productive investments, stagnant productivity, the deindustrialisation of entire regions, the divide between North and South, the syphoning of resources into offshore accounts, the crippling of state revenues and the ruin of public services. It is the City which needs privatisations so that hedge funds can loot state assets and which requires that Britain be constantly doing the US’s bidding—from arms to Ukraine and warmongering against Russia and China, to assisting genocide in Palestine.

Yet, to confront the City is precisely what the leaders of the left and trade unions have refused to do. Corbyn spent his time at the head of Labour clinging to the liberal establishment—despite its never-ending attempt to crush him. Despite flowery words about “for the many”, he was always looking to appease the Blairites rather than organising a fight. As a result, he was paralysed, weak and became the candidate for a second referendum on the EU—pushing large numbers of workers into the arms of Johnson and Farage.

As for the trade union leaders, impotent and comfortable, they are still beholden to Starmer. Every major strike organised in recent years has been led to defeat by these misleaders, who are more worried about rubbing the Labour tops the wrong way than mounting a real struggle against the rich and powerful (see article on the Birmingham bin strike). The new party is already dominated by ex-Labour councillors, trade union bureaucrats and political advisors who joined it to advance their careers. These people constitute an endless reservoir of conservatism and accommodation with the establishment and intelligentsia, which, in the end, means accommodation with the City.

With these people at the helm, the party will never go for the jugular of the City. And, thus, it will never win the working class away from Farage, it will never be a pole of struggle and it will remain an outfit for middle-class do-gooders and careerists. This is why we say that the main task of socialists in this party is to fight to avoid this outcome and ditch the liberals (see "Ditch the liberals, win the workers").

In more left-wing corners, Zarah Sultana & Co are talking tough against the billionaires and for taxing the rich. But again, even such small measures will require war with the City, which Sultana herself, or certainly her partners in the leadership, definitely do not want. And on the other side, big businesses will not give up their wealth—or part of it—just because some MPs pass a bill in Parliament. Look at what happened to Liz Truss. As soon as they don’t like a government, they bring it down. There is no space for a gradual and peaceful accommodation with the City. Either the City loots the country, or the working class seizes it. There is no middle ground.

This is why building a new political force is not only about having a few good policies on paper. It isn’t only about adopting an “anti-capitalist programme” as many leftists hope it will. Even the most radical programme will remain a dead letter as long as the party is dominated by liberal forces and middle-class elements, tied to the ruling class by their ideas, way of life and ambitions. For nearly a century, the Labour Party stood for the nationalisation of the commanding heights of the economy. Yet, this never prevented it from being a loyal servant of the City.

In the end, building a new party which can change the direction of this country is about organising a confrontation with the City and with US imperialism. Workers are looking for a fight, not for a thousand-points programme. And if the party is led by hippy dippy liberals, Waitrose “socialists” and satisfied bureaucrats, workers know there won’t be one. And they will be right.