The new year’s resolutions Labour must make for Britons in 2025

Editorial: After a rocky six months, Keir Starmer has a chance to show that he ‘gets it’ with a few easy wins

Almost six months on from a decisive election victory, and having navigated some “choppy” moments since, as the prime minister calls them, Sir Keir Starmer is right to sound a note of humility in his new year message.

Fairly, he can point to some achievements even in this short period of time – investment in green energy and the NHS; deportation of foreign criminals; the minimum wage up by a record amount. But with the excitement of general election night feeling decidedly distant, he also acknowledges: “I know there is still so much more to do. And that for many people, it’s hard to think about the future when you spend all of your time fighting to get through the week.”

Just as he did as leader of the opposition, Sir Keir wants to show that he “gets it”, and 2025 represents an opportunity for him to inject some energy, optimism and charisma into his government, to raise its game in communications (where it’s been startlingly flat-footed), and most of all, to retrace and correct some of the more foolish missteps of 2024. If he were to do that, he would at least assuage the concerns of those who claim that the government doesn’t listen.

The single most important political moment in 2025 – whether it is termed a “reset”, a “relaunch”, or something else – will be Rachel Reeves’s second Budget. Given the state of the public finances the chancellor inherited, she doesn’t have that much room for manoeuvre, but with total revenues of just over £1 trillion and public spending at another £200bn more, every chancellor has options – and deeply political ones at that.

Easy “wins” are available for the government. The most obvious, because it deals with the most unpopular thing Labour has done since July, would be to find a way to restore the pensioners’ winter fuel allowance, or at least extend it to more of those genuinely in need. Reportedly, the prime minister himself now regards the move to restrict it to only the very poorest as a “mistake”, and it has needlessly drained his administration of political capital and credibility for a mere £1.5bn annual saving.

Nowhere was there even a hint, during the general election campaign, that the government would contemplate attacking this social security benefit, and there was little time for those adversely affected to plan for its loss. If she wanted to turn the policy reversal to Labour’s advantage in 2025, Ms Reeves could claim that her careful stewardship of the Treasury after all the “Tory chaos” allows her the flexibility to respond to people’s concerns, and far beyond those applicable to the old folk.

The government also needs to find a way to ameliorate the so-called “tractor tax”, because the decision to restrict inheritance tax relief for farms was so obviously underresearched. Ms Reeves likes to project an image of a rational, evidence-based, economically literate policymaker, which she no doubt is, but on the tractor tax, the Treasury traditions of Budget secrecy badly let her down. For whatever reason, she and her officials failed adequately to consult the Department for the Environment about the practical consequences of what seemed like a logical move intended to make inheritance tax rates more consistent and to clamp down on tax avoidance.

Now, and long before her next Budget, she should listen to tax experts who have suggested raising the threshold for farm estates and freezing any inheritance tax liability until those assets are sold by successor generations. The farmers’ cause has attracted a good deal of sympathy, including from the TUC, and some sensitivity to rural concerns might actually help Labour MPs in such areas to hang on to their seats.

Again, the cost of rethinking this policy would be relatively modest – £500m a year – and the political benefits substantial. Sir Keir, surely, cannot want a year of war with the countryside, or the kind of militant direct action seen during the fuel protests in 2000 – and the inevitable climbdown to come. All prime ministers should choose their fights carefully, and this one isn’t worth it.

Best of all, from the point of view of boosting growth, strengthening national security and reducing irregular migration, would be for this Labour government to achieve a radical reset in relations with the European Union. This is in fact underway, with British ministers attending certain European councils and the German-British defence agreement signed in October.

The prime minister has built on the work done by Rishi Sunak to repair bridges of friendship after the dismal Johnson-Truss era, and has established cordial relations with EU president Ursula von der Leyen, France’s Emmanuel Macron, Germany’s Olaf Scholz and, a little less comfortably, the prime minister of Italy, Giorgia Meloni.

In February, Sir Keir will attend an “informal” summit of European leaders, focused on defence. But Britain’s closest allies in the European Union are rightly puzzled by the ambitions indicated in Sir Keir’s “reset” rhetoric, and by the British insistence on restrictive post-Brexit “red lines”.

There are signs that the EU is suspicious that the UK will try to use an agreement on defence as a back door to getting sweet deals with Brussels on trade. If so, then both sides will need to think hard about their respective economic and defence challenges, and whether being too fastidious about past commitments will actually harm the interests of both the UK and the EU, in a world in which Russia threatens and America cannot be relied upon. There is plenty of evidence that the British people regret Brexit, and that they understand the continuing damage it is inflicting on living standards and national security.

Sir Keir has a huge parliamentary majority and the whole machinery of government at his disposal. Invoking, as he does in his new year message, the upcoming 80th anniversaries of VE Day and VJ Day, and the work of the post-war Attlee government, Sir Keir will need to be much more bold, and much more of a leader, if he wants Britain to be “a nation that gets things done”.