Keir Starmer’s plan for 2026 looks familiar – and risky

The “cost of living” is a policy you reach for when there is little else to say. Ed Miliband, when he was leader of the opposition, even enjoyed some success with his plan to freeze gas and electricity bills, forcing George Osborne, the chancellor, to announce a £50 cut.

It is not just an opposition slogan. The first of Rishi Sunak’s five priorities for 2023, announced three years ago this month, was to halve inflation – “to ease the cost of living”. (Give yourself a prize if you can remember the other four: grow the economy, cut debt, cut NHS waiting lists and stop the boats.)

Inflation did indeed halve, but it did Sunak no good. Prices continued to rise – just more slowly.

The cost of living never truly went away as an issue, but now it is back with a vengeance. And with Keir Starmer’s habit of over-emphasising everything, it has become his government’s defining priority. He is “expected to tell No 10 staff” on Monday, according to The Times: “The word I expect to define this year is relentlessness. Relentless focus on the cost of living. Relentless delivery of change people can feel. Relentless clarity on the story about how we are changing this country.”

After five missions and three priorities, Starmer’s communications team has distilled the message still further into a single aim: as he is “expected” to put it, “putting more money in people’s pockets”.

In practice, this amounts to more Milibandism. Rachel Reeves announced a £150-a-year cut to gas and electricity bills in the Budget, achieved by removing the cost of subsidising low-income households from bills and funding it through general taxation.

This is a green policy only in the sense that it recycles taxpayers’ money. It is, in effect, taxing people in order to hand the money back to them as lower bills. While social subsidies should never have been loaded onto bills in the first place, Reeves is still using our money to reduce our bills.

The same logic applies to the rail fare freeze. Now that more of the railways have been renationalised, it is even clearer that this policy takes money from all taxpayers and hands it back to a smaller group (mainly better-off ones) to help keep the consumer price index down.

This is bad politics. Voters recognise when they are being bribed with their own money, and they are not impressed. The best that can be said of it is that it is not as bad as Donald Trump’s tariff policy, which raises prices for American consumers while the president posts about “Affordability!” on Truth Social.

It might be argued that these measures are symbolic – a way of signalling that the government cares about the cost of living. Taxpayer-funded interventions are merely cover for the real Starmer-Reeves strategy: to hope that economic growth exceeds expectations, that interest rates continue to fall, and that wages keep outpacing prices.

The last time that gamble paid off was, ironically, in 2015, when real disposable income per head rose sharply in the year before David Cameron was re-elected.

It did not work out so well for Sunak. Other failures mattered too – including broken promises on the NHS and small boats – but his cost-of-living pledge collapsed nonetheless. Starmer, it should be said, is not faring much better on the NHS or the Channel dinghies either.

There are also worrying signs that taxes may have to rise again in Reeves’s third Budget at the end of this year – assuming she is still chancellor. Net immigration now looks likely to be lower than forecast. Most voters welcome that, but they will not credit Labour for it while small boats continue to arrive – and they will certainly punish the party for higher taxes.

Meanwhile, disability benefit costs are rising faster than expected, adding further fiscal pressure.

For a prime minister and chancellor apparently governing from one day to the next, the Budget remains a distant prospect. Starmer’s professed “focus” on the cost of living is repeatedly disrupted by events abroad. His speech to the political cabinet on Tuesday was revealing, amounting to: “I am totally focused on the domestic agenda – when I get back from Paris this evening.”

Economic forecasts are as likely to prove too optimistic as too pessimistic. That leaves a 50-50 chance that living standards will end the year higher than expected.

For a prime minister described as “in serious trouble” – the phrase used by Sally Morgan, Tony Blair’s former political secretary, on a podcast before Christmas – a 50 per cent chance of survival might sound tolerable.

Starmer has little else. He has staked his future on the “cost of living” – a wager no more reliable than the toss of a coin.