The Hawthorn Headliner

Welcome to the latest edition of Hawthorn Advisors’ political newsletter – our take on political and policy issues.

The state of play?

Keir Starmer’s new(ish) Labour Government has admittedly struggled to live up to its promise in recent months. Polling on voting intention by YouGov last week shows a very close contest between Labour and Reform, with 26% and 25% respectively, and the Tories at 22%.?

Hawthorn understands that the mood within the Parliamentary Labour Party (PLP) is rather miserable. Some of the new intake of MPs in 2024 are reckoning with the realisation that the job isn’t quite what they expected. Many have also been bruised by damning correspondence from constituents on contentious issues such as pensioners’ Winter Fuel Allowance and the U-turn on WASPI women compensation.?

Yet, while the mood is downbeat, the party line is holding. Most Labour MPs accept that the new Government has been dealt a difficult hand – particularly on the economy– but with four and a half years before another election is due, it would be hasty to cause disquiet yet.??

The new intake of MPs in particular remain loyal, partly because they fear stepping out of line. More experienced MPs – especially those spared a front bench role – are more restless, with some senior figures indicating that there must be change in the structure of Labour’s top team. While none call out Keir Starmer directly, some point the finger at Morgan McSweeney, the all-powerful Chief of Staff at 10 Downing Street.?

Much of the blame for recent Labour own-goals is being directed at the Number 10 comms outfit, as well as at Keir Starmer’s seeming reticence to take difficult but politically prudent decisions. Two recent examples are the grooming gangs scandal and the tardy resignation of Tulip Siddiq.?

A senior Labour official said: “The Tulip affair dragged on,” and that Keir Starmer is showing he has difficulty when it comes to judging the writing on the wall when it comes to colleagues he knows and likes. The grooming gangs scandal was addressed by Home Secretary Yvette Cooper, yet fell short of an independent national enquiry which is what opposition parties are calling for.??

Again, many in the Labour party fear that letting the issue drag on over multiple weeks, and failing to address the issue (and the mood of the country) head-on, is becoming a feature of the Starmer modus operandi – not a bug.?

Treasury tidbits?

Rachel Reeves was under the microscope last week, as the Chancellor came under fire for bond market turmoil.? A rise in borrowing costs, and the corresponding impact on Reeves’ fiscal headroom, led to murmurings that Starmer would replace his Chancellor as soon as this Summer.?

But the prevailing consensus among Labour insiders is that Reeves is here to stay. This is partly due to the understanding among the PLP that she has been dealt a torrid hand, and that she has been a victim of (mis)fortune in recent weeks due to broader global economic conditions. Many MPs also point to poor communications as key to Reeves’ current woes.?

On the political front however, the view is that to sack Reeves at this point would strike an almost fatal blow to the Starmer project – and inevitably lead to Starmer’s own ousting, too.??

Yet a double-header of good news gave Reeves a renewed hope as she jets off to Davos this week. A surprise drop in December’s inflation figures to 2.5% eased market pressure, and the reshuffle in Reeves’ top ministerial team in the wake of Tulip Siddiq’s resignation was warmly received by Labour MPs and indeed the business community.??

Emma Reynolds, who was previously the Parliamentary Under-Secretary of State for Pensions, is stepping? into Siddiq’s position as City Minister. One of a few 2024 intake MPs to have served in Parliament previously (she was the MP for Wolverhampton North East from 2010-2019), she immediately joined the Treasury team after the 2024 election with a Treasury and Work and Pensions portfolio. This stands to reason – in the interim, she worked at TheCityUK as a managing director for public affairs, policy, and research. Her strong connections across the Square Mile will hold her in good stead as she joins Reeves in rebuilding business confidence in the Government.??

Torsten Bell has been appointed to replace Reynolds as the Parliamentary Under-Secretary of State for Pensions. One senior Labour official said of the the promotion: “inevitable – he was always going to have first dibs on a treasury job.”?

After a stint as a civil servant, aide and Head of Policy for the Labour Party under Miliband, he headed up the Resolution Foundation think-tank, where his focus on policymaking for the medium-term, improving productivity and growth, and “radical incrementalism”, gained him a reputation as one of the key economic thinkers behind the Starmer project.??

Parachuted into the safe Swansea West seat after the then MP’s suspension, and waiting in the wings since the election, his elevation was always a matter of when, and not if. Treasury watchers have a large pile of think tank papers and a book on policy Bell published last year to pick through as they get to know the new team.??

Trump’s mixed messages?

Of course, this week’s political activity in the UK will be drowned out by the official kick-off of President Trump’s second term in office.??

Many veteran Labourites have a quite pessimistic outlook on the state of the relationship between the Trump and Starmer camps. While Labour’s outreach to Trump’s team was widely briefed in the past few months – with Starmer and Lammy’s dinner at Trump Tower in Manhattan as proof – recent news suggests a more complicated picture.?

The front page of the Daily Mail on Sunday splashed on “Team Trump’s revenge on Starmer for ‘meddling’ in US Election”, citing a mooted veto on the appointment Peter Mandelson as UK Ambassador, a delay in Starmer’s invitation to Washington, and the plots to boost Farage as three ways in which Trump and his team will hurt Starmer.?

Many Labour MPs are worried on this front – though suggest that the unpredictability of the last Trump Presidency will mean all these concerns could well come to nothing.?

One last thing…mark your calendars?

Hawthorn understands that some quite senior officials in No. 10 are getting a little nervous about Gabriel Pogrund and Patrick Maguire’s new book “Get In”, which is due to be published on February 13th.?

This book follows their previous book of insider stories from Labour “Left Out”, which covered Labour’s internal chaos of the Corbyn years. Unlike “Left Out”, which was largely based on previously well-published WhatsApp and email leaks, their new book promises to spill the beans on the inside story of Starmer’s leadership from his election as leader of the Labour Party in 2020 to his lockdown drinks police investigation, the Hartlepool by-election and his arrival in Downing Street with Sue Gray.??

It promises previously untold stories from Labour insiders and unpublished WhatsApp leaks. It seems unlikely that this is going to calm down the tensions inside No10, but we will have to wait until it’s published on 13 February to find out.??

If you’d like to speak to Hawthorn about our Political Advisory offering, please email Mark Burr at [email protected].