Good morning. Where Labour once had a D:Ream, it now says that our long national nightmare is … not over. “Frankly, things will get worse before we get better,” Keir Starmer will say today, in a speech billed by Downing Street as a “direct message to the working people across Britain”. Does it count as the end of the honeymoon period if you’re the one telling everyone it’s rubbish?
There is method to Starmer’s approach: he is seeking to blame the difficult decisions ahead on the Conservatives as much as possible. But whether voters will accept this explanation of painful steps like proposed new limits on the winter fuel payment for pensioners is another question.
Today’s newsletter, with Guardian political correspondent Kiran Stacey, is about the politics and economics of that approach: whether it’s true, whether there are any alternatives and whether voters will buy it. Here are the headlines.
Five big stories
Ukraine | Russia fired hundreds of drones and missiles at Ukraine on Monday, killing at least seven people and battering the already weakened energy grid. Ukraine’s president, Volodymyr Zelenskiy, again called for more help with air defence support and an end to restrictions on using western weapons to strike deep into Russian territory.
Mental health | More than 500 children a day in England are being referred to NHS mental health services for anxiety, more than double the rate before the pandemic began, the Guardian can reveal. Officials said the rise in demand was straining the capacity of the health service to provide timely treatment.
Israel-Gaza war | Benjamin Netanyahu is facing a backlash led by the far right of his own fractious coalition over the limited nature of Sunday’s airstrikes against Hezbollah. Military sources cited in the Israeli press said there was no planned follow-up to the operation.
Housing | A large fire that engulfed a block of flats in Dagenham, east London, was brought under control with everyone accounted for, the London fire brigade said, as attention turned to the role cladding played on a building with known fire safety issues.
France | France has been plunged into further political chaos after Emmanuel Macron refused to name a prime minister from the leftwing coalition that won the most parliamentary seats in the snap election last month. Amid threats of impeachment from the left, another round of talks is due to start today.
In depth: ‘They have a window to convince people anything unpopular is the Conservatives’ fault’
The crucial context for Starmer’s speech today, and the budget Rachel Reeves is expected to deliver in late October, is the debate over the size of the hole in the public finances left by the Conservatives.
Reeves (pictured above) said last month that while she understood that she would face a rough economic legacy, the Tories had “covered up” a £22bn gap between Jeremy Hunt’s stated budget and the reality of government spending plans.
The Tories say they left a much rosier economic legacy than Labour claims, and note that the largest single factor in that “black hole” is Reeves’s decision to give striking public sector workers a pay rise.
Others argue that, whether the Tories hid anything or not, the single year £22bn figure is a significant understatement of the problem – with political analyst Sam Freedman suggesting that (£) the reality over the next five years is more like £60bn, for example. And then there are the arguments about whether the medicine Labour proposes will be effective anyway.
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What is Starmer’s strategy?
Well, it’s not subtle, and it’s not unexpected. “We reported during the campaign that this is roughly what they would do,” Kiran Stacey said.
In one sense, every government tries something like this: front-load unpopular measures, blame their predecessors and hope that the payoff will be visible to voters in a few years’ time. “They think they have a brief window, while the Tories are in the middle of a leadership campaign, to convince people that anything unpopular is the Conservatives’ fault,” Kiran said.
The elaboration from pre-election strategy is the message that the Tories lied about the scale of the problem. “Before the election, I said we would face the worst inheritance since the second world war,” Reeves said in July. “Upon my arrival at the Treasury three weeks ago, it became clear that there were … things that the party opposite covered up from the country.”
Starmer’s speech is a bald reiteration of the same point. Meanwhile, he will try to mark a symbolic shift, framing his speech by inviting an audience of “people who serve our communities and our country into the rose garden at Downing Street”. That is the same garden, he says in the Times this morning, that “became a symbol of the rot at the heart of [Boris Johnson’s] government” when it was used to host a wine and cheese party during the pandemic.
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Is it true that Labour has a worse legacy than expected?
To support their case, Starmer and Reeves can point to the Office for Budget Responsibility’s assessment that the £22bn gap “would constitute one of the largest year-ahead overspends … outside of the pandemic years”.
Similarly, the director of the Institute for Fiscal Studies, Paul Johnson, wrote last month that “the extent of the in-year funding pressures does genuinely appear to be greater than could be discerned from the outside”. He pointed to the “astonishing” £6bn cost of housing asylum seekers as an example.
“There definitely appears to have been some double counting that people hadn’t quite understood,” Kiran said. “It’s not unfair to say it’s worse than expected.”
On the other hand, Johnson also said that, as a whole, the dire state of the public finances “has been perfectly evident for a long time”. “The real, knowable scale of the problem is not some unaccounted for black hole,” Kiran said. “It’s that Labour didn’t want to say it would reverse Conservative tax cuts. So they can rightly say that some things were hidden, but they can’t say they didn’t sign up to much of it.”
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What does this mean for tax and spending policy?
This is the corner that Labour has boxed itself into: it knows that it needs to find more money to spend on public services, and it has already committed about £10bn a year to increased wages for public sector workers. But it has ruled out any increase to the biggest revenue-raisers at its disposal – national insurance, VAT, and income tax. That means it will have to find what it can from a very narrow section of the UK’s economic base – or make painful cuts elsewhere, even just to stay still.
“It’s an incredibly difficult circle to square,” Kiran said. “They think they can say that the Tories are to blame for a couple of years, but there has to be genuine improvement after that” – and if any changes are to be noticeable to the voters by the time of the next election, they need to make a start now.
Reeves can increase taxes that don’t affect the UK’s fabled “working people”, like capital gains tax and inheritance tax, without breaking her election pledges. “There would be an economic argument that they just have to bite the bullet and do something on income tax or national insurance,” Kiran said. “But I just don’t think they will break their biggest promise when they’ve spent so long painting the other side as crooks and liars.“
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How will the Tories respond?
Since the election, many Tories have bristled at Labour’s characterisation of their economic legacy: as Nick Timothy, the MP and former adviser to Theresa May, wrote in a column for the Telegraph, “[Labour’s] claim that the new government ‘has inherited the worst economic circumstances since the war’ is nakedly political and deeply dishonest.”
He pointed to a lower unemployment rate than when Labour last left office, lower borrowing, and inflation under control. Similarly, Jeremy Hunt said earlier this month that better-than-expected GDP growth figures were “further proof that Labour have inherited a growing and resilient economy”.
“It is credible to say all that,” Kiran said. “Low inflation, low unemployment, and high growth are all things you would want coming into government.”
But they only tell a fraction of the story: “The problem is that long-term damage to the public sector is baked in, and it will take time and money to undo. And the forecasts only look good if you accept that a 1% increase in real terms to government departments across the board will be enough – once you say that that isn’t possible, and you’re going to have to put £20bn or £30bn into public services, it all looks very much harder.”
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What other pressure will Starmer and Reeves face?
The Tories aren’t likely to be the only source of criticism: already, seven MPs have lost the Labour whip after rebelling over the two-child benefit cap, and there are many more who are dismayed by the prospect of new limits on pensioners’ eligibility for the winter fuel allowance.
“There are people against that who still hope they can get, if not a U-turn, some mitigation – for example, tapering the change rather than having a cliff edge in eligibility,” Kiran said. “But my guess is that Reeves will see this as an early test of strength and hold her ground. The payoff might be a change to the two-child benefit cap.”
Part of the problem is that Labour’s massive majority is built on many victories by small margins, which means that others could rebel if they think it’s going to help them hang on to their seat at the next election.
“In the short term, they can probably dissuade most people from rebelling in a serious way,” Kiran said. “But if Starmer’s ratings start to fall and they don’t see themselves winning next time anyway, the ones who are vulnerable could start to get a lot louder.”
What else we’ve been reading
Established in 1956, NCT classes help hundreds of thousands of parents in the UK each year to prepare for the arrival of a new baby. But, asks Sirin Kale, is the organisation’s focus on vaginal births putting women in danger? Hannah J Davies, deputy editor, newsletters
Recalling their patchy past performances, Alexis Petridis is unsure if the long-prophesied Oasis reunion will be worth the wait … but argues that’s what makes the prospect so compelling. “On one level a sure thing, it’s also attended by a sense of uncertainty: you can’t be 100% sure what’s going to happen, which I suppose makes it worth seeing,” he writes. Charlie Lindlar, newsletters team
It’s “the ick”, married style: psychotherapist and writer Moya Sarner asks whether you really want a divorce, or whether you’re just “getting divorcey”. Hannah
The vibes are good right now, but does the Kamala Harris campaign’s plan to ride “meme, celebrity and cultural symbolism” rather than policy to victory risk undermining what is a pivotal election for America, Nesrine Malik wonders. Charlie
ICYMI: Fiona Sturges interviewed Sarah Koenig, whose success with Serial paved the way for the true-crime pod boom, but also left her with mixed feelings about the case at the centre of the show. Hannah
Sport
Football | Sven-Göran Eriksson, England’s first overseas manager and winner of multiple honours at club level, has died at the age of 76. Eriksson revealed in January that he had been diagnosed with terminal cancer and that he likely had “at best” about a year to live. Read Paul Hayward’s tribute, and Eriksson’s moving interview shortly before his death with Simon Hattenstone.
Tennis | One year since the unforgettable sight of her winning a first grand slam title after years of suffocating expectations, Coco Gauff returned to the US Open with a dominant first‑round win, easing past Varvara Gracheva of France 6-2, 6-0. Meanwhile, British qualifier Jan Choinski fought back from two sets down against Roberto Carballés Baena but was eventually edged out 6-2, 6-3, 5-7, 6-7 (5), 6-3.
Formula One | The McLaren team principal, Andrea Stella, has insisted they will not give preferential treatment to Lando Norris over his teammate Oscar Piastri even as Norris begins a run-in for the Formula One world championship against Max Verstappen.
The front pages
The Guardian leads with “Revealed: ‘staggering’ rise in anxiety among children”. Sven-Göran Eriksson is remembered on our front page and most others. The Daily Mirror and Metro say farewell with “Don’t be sorry, smile … it’s been fantastic”, which the Mirror calls his “last TV words”. Law, order and security are other themes today. “Police have given up on punishing shoplifters” says the Times, while the Telegraph has “Violent criminals allowed to just say sorry”. “Military training cut back to fund pay rises” is the top story in the Daily Mail. “Top defence contractors poised for $52bn cash bonanza as orders soar” – that’s the Financial Times. The i has “Safety fears at British care giant owned by Kuwait – despite £500m in taxpayer cash”. Lastly, the Daily Express: “Farage warns of ‘shocks’ to come in Labour budget”.
Today in Focus
Black Box: episode 2 – The hunt for ClothOff, the deepfake porn app
This week, Today in Focus is revisiting the Black Box series. This episode – first broadcast in March 2024 – sees Guardian journalist Michael Safi try to find out who is behind an AI company whose deepfakes are causing havoc around the world, with police and lawmakers baffled about how to deal with them. And in trying to answer one question, he is left with a bigger one: is AI going to make it impossible to sort fact from fiction?
Cartoon of the day | Stephen Lillie
The Upside
A bit of good news to remind you that the world’s not all bad
The US National Park Foundation is to get a $100m (£76m) donation, the largest grant in its history. The money – gifted by Lilly Endowment Inc, a private philanthropic foundation – will go towards maintaining more than 400 sites, including famous spots such as Yosemite and Yellowstone national parks, along with memorials, monuments and locations of historical significance. Will Shafroth, head of the National Park Foundation, said: “This grant will allow us to supercharge our efforts to ensure our national parks are for everyone, for generations to come.”
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Bored at work?
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