Reeves rallies a fractious Labour party caught in its first test

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Good morning. How will the Labour party row over benefits policy play out over the coming days and weeks, and what does it tell us about the internal state of the opposition? Some more thoughts on that in today’s note.

All just a case of history repeating?

Rachel Reeves used her speech to the New Statesman’s summer reception to deliver a robust defence of the Labour party’s benefits policy. She reminded the assembled audience of friendly lobbyists, party activists, shadow ministers and political journalists of a recent NS piece by the magazine’s editor, Jason Cowley, that talked of two Rachels: a creative Rachel, and a cautious one.

Reeves’s speech was, essentially, a defence of the cautious Rachel, the one who worries about Labour’s promises and whether they are costed. It was, essentially, a not-particularly-coded way of saying “look, you might not like that the Labour party has committed to maintaining the cap on child welfare payments, but you hated losing all those elections even more”.

Then she did something I thought was interesting. She said that without the “cautious Rachel”, the country would never get the benefit of the creativity of Bridget Phillipson, the shadow education secretary, or of Wes Streeting, the shadow health secretary. And she praised the campaigning work of Peter Kyle, the shadow Northern Ireland secretary, who is the Labour party’s point person in the Mid-Bedfordshire by-election.

What connects Phillipson, Streeting and Kyle is that they are all on the right of the party and generally considered to be on the rise under Starmer.

Although both Phillipson and Streeting have had difficult battles of their own with the shadow Treasury team over spending, all three are close allies of Reeves. In addition to her official role as Labour’s shadow chancellor, she has another important unofficial role as de facto leader of the Labour right.

The subtext here was a cry to the Labour party’s right wing to rally behind the Starmer project (and most importantly for these purposes, the shadow chancellor) ahead of a shadow cabinet meeting later today that is expected to be pretty fractious.

The backdrop to Reeves’s speech, which was rather more punchy than the largely supportive crowd might have expected, was a meeting of the Parliamentary Labour party earlier that day, which has variously been described to me by its attendees as “fraught”, “tense” and “fractious”.

Not all of those who spoke out against Keir Starmer’s announcement that the Labour party will not scrap the two-child cap on child welfare payments were from the left of the party. Stella Creasy warned that the policy would cost more money in the long term, while Rosie Duffield, the chair of the women’s PLP and a single mother, also criticised the policy.

The silences were also significant. As Richard Burgon, the Corbynite candidate for the deputy leadership in 2020 said, opposition to the two-child limit unites “the left . . . and the not-so-left” of the Labour party. (Another demonstration of that fact is that Anas Sarwar, the Scottish Labour leader and another figure from the right of the party, has announced that it remains the aim of the Scottish Labour party to scrap the policy, which is devolved to the Scottish parliament.)

How is this row going to play out? I think it will burn itself out, at least this side of the next election. It will be one big subplot of the Labour party conference this year, but while it’s true to say that opposition to the measure stretches the whole length and breadth of the Labour party, there isn’t a parliamentary flashpoint that will bring the row to a head. It will make for some stormy meetings at the party’s national policy forum this weekend, at which they set out the contents of Labour’s manifesto. But I don’t think disputes over lifting the two-child limit — a change estimated to cost £1.4bn — are likely to erupt any more before the election.

But after? That’s a different story. The precedent that many in the Labour party are talking about is the first rebellion of the New Labour government, over lone parent benefit.

Tony Blair and Gordon Brown had committed to stick to Conservative spending limits and as a result they had to implement sharp cuts to lone parent benefits. The resulting rebellion in 1997 saw 61 Labour MPs break the party whip and resignations from the government. One experienced Labour hand recalls seeing MPs crying in the division lobbies.

I do think there is quite an important set of differences, though. One is procedural: MPs just are more rebellious now and will continue to be so. While that policy caused a major row, the Labour government had a big enough majority to see off quite a large rebellion. Equally importantly, that vote took place in an era long before the existence of a digital version on Hansard, a publicly available voting record, or the various civic society projects that processed those things such as TheyWorkForYou.

The second is economic: the last Labour government had, in economic terms, as close to the best inheritance any opposition has received from an outgoing government. The next one . . . won’t. I don’t want to downplay the consequences that Labour’s lone parent benefit policy had on the families affected, but it is one thing to stick to a tight spending regime in a booming economy but quite another in a sluggish one.

In many ways though, all of this is just the first test for the Labour party. In addition to the rosy economic inheritance Tony Blair got from John Major, he also inherited a fairly benign set of global and local factors. The UK’s population was younger, with less acute upward pressure on the NHS and social care. (Do read this excellent piece by William Wallis for much more on the latter, also featuring this alarming chart about the pressures facing local authorities.)

As will, I imagine, be obvious, none of this is something Labour wants to be discussing publicly this side of an election. It’s true to say — as some Labour MPs are — that this particular conversation could have been avoided with a more vague answer from Starmer.

But when I look across the whole of the public realm — at the pressures on university finances (the subject of the FT’s Big Read today), on the “jaws of doom” facing local authorities — I think that Reeves will probably be forced to give many more rallying speeches this side of the election. If Rishi Sunak is lucky (or perhaps that should be unlucky, given the circumstances) his path back to Downing Street may not be as narrow as I think it is.

Now try this

This week, I mostly listened to Brian Eno’s “In Dark Trees” while writing my column. It’s a lovely piece of haunting instrumental music, which I discovered while listening to Radio 3’s wonderful Night Tracks programme.

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