It’s fine to be confused by Labour’s economic plans – here’s the thread that connects it all

How can you get someone to buy an electric car? Some people might be persuaded by the urgent need to act due to the dangers of climate policy. Others may make the purchase because electric cars are cheaper to run in the long term. A few, according to Jacinda Ardern, buy EVs because it is quieter to sneak up on their prey while hunting. 

Different things appeal to different people for different reasons. The art of political communications is telling one overarching narrative, but targeting different messages to different groups to garner support and affect behavioural change. 

One of the big criticisms of the first year and a half of this Labour government has been the disconnect between its policies and its communications. What are they trying to achieve, and why? Who are they for, and who are they against?  

It’s perfectly reasonable to be confused. In 2025, ministers have launched at least 11 major strategies, plans and flagship policy papers – from a 10-year industrial strategy and a £725 billion infrastructure blueprint to a 10-year NHS plan, a post-16 skills white paper, and new strategic mandates for the National Wealth Fund and Great British Energy – plus a thicket of sector plans beneath them. Hundreds of pages of dense policy text, often full of good ideas but not so digestible for the public. At the same time, the only consistent message that voters heard for much of the year was around a ‘fiscal black hole’ and tax rises to come. For the second budget in a row, fiscal drama drowned out any conversation about the economy Labour is trying to build.  

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This is unfortunate because under the hood, there is a thread that connects all these announcements. Starmer, famously the son of a toolmaker, is attempting to give people the tools to participate in a modernised economy. Infrastructure, like transport and housing, will help people move to places with greater job prospects. The skills plan will help people re-train or acquire new qualifications. A better NHS will help businesses access a healthier workforce. The British Business Bank and National Wealth Fund have been given more money to provide financing to key UK businesses.  

These are sensible, long-term plans endorsed by the likes of the International Monetary Fund. However, it’s hard to put these incremental changes into perspective for an electorate that is reeling from the cost of living crisis, especially when so much of the near-term action is about a tax downpayment to fund these plans whilst getting the bond markets off people’s backs.

Still, the latest budget gives us a bit of a guide for what to look forward to in 2026. The higher tax buffer gives the chancellor a bit of a break from feverish tax speculation, and potentially room to start telling a better story. The cost of living is likely to get much more airtime, with moves to cut energy bills and freeze rail fares kicking in. Interest rates are likely to fall a little more. These could be seen as little wins for Labour, and they can start to tell a story about how they have kicked off a war on bills whilst improving the economy for the long-term.

However, if they really want to start telling this story they need to be bolder. The budget left out several tax reforms, such as a ‘settle up tax’ for wealthy individuals leaving the UK. Such moves are emblematic of an approach that treats all businesses and business owners uncritically. To build a new economy, Labour needs to recognise that, unfortunately, some of the most ‘successful’ people and businesses today are perfectly fine for things to stay the same even if most of the country wants change.

They need to be much bolder in calling out vested interests while championing those who are working towards a better future. To go further on cutting energy bills, they need to be comfortable with potentially reducing the profits of energy companies. To really drive forward the industrial strategy, they need to stick to their priority sectors and hold firm from those who complain that they didn’t make the cut. To really press forward with net zero, they need to hold the line against unions who want to preserve jobs in oil and gas.  

But these are battles the government needs to pick. You can’t be all things to all people all of the time, or you risk end up being nothing to no one. In 2026, the government need to merge their policies with their politics. Be clear who they are for, who they are against, and what is the primary purpose of their economic interventions. 

Pranesh Narayanan is a senior research fellow at IPPR and former treasury economist.

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