Labour hopes immigration crackdown and interest rate cut can stop Reform

Sir Keir Starmer is pinning his political hopes on an interest rate cut this week and a looming crackdown on immigration to fight off Reform UK after the right-wing insurgents’ stunning success in the local elections.

Labour MPs have urged No 10 to wake up to the threat posed by Nigel Farage’s party, which outperformed any others when voters across parts of England went to the polls last week.

Downing Street sources insisted that the Prime Minister was taking Reform seriously but would not make any policy U-turns despite anger from some voters over measures such as the cuts to winter fuel payments and sickness benefits.

Starmer is relying on three main goals – controlling the borders, improving the NHS and making people better off – to improve the public mood and restore Labour’s political fortunes, according to allies.

The Bank of England is widely expected to cut interest rates when its monetary policy committee meets on Thursday, a move which ministers will argue is only possible thanks to the stability they claim to have restored to the economy and public finances.

They will resist calls – made over the weekend by the influential chief of the Unison union – to relax the current borrowing rules in order to spend more on public services, arguing that it would undermine the Government’s credibility with financial markets.

The next major Government intervention on domestic policy, alongside a string of foreign summits which Starmer is attending or hosting this month, will be a policy document on immigration which will promise to cut the numbers of both legal migrants and asylum seekers entering Britain illegally. The white paper is currently expected to be published next week, The i Paper understands.

‘Alien versus Predator’

Labour insiders at all levels have vowed to step up the scrutiny they apply to Reform UK. Health Secretary Wes Streeting told Sky News: “I don’t know whether it will be Reform or the Conservatives that emerge as the main threat. I don’t have a horse in that race, but like Alien versus Predator, I don’t really want either one to win.”

Another MP said: “I think we have to start taking them more seriously.” And a Labour councillor added: “It’s much tougher on the ground than I think a lot of people in Westminster realise. Reform can say anything they want on the doors, and we’re left defending difficult decisions the Government have made.”

Focus groups held in Runcorn and Helsby immediately after Reform narrowly won last week’s by-election in the formerly safe Labour seat found that voters were angry about the cost of living as well as the more traditional right-wing issue of immigration.

One participant, a nurse named Matt, told the group run by More in Common: “I voted Reform, I’m traditionally a Labour voter… it wasn’t going to influence much in terms of the way the country’s run, but hopefully it will be a little bit of a kick up the bum that changes things. Change is needed.”

On Sunday, David Blunkett became the latest grandee to warn that the way the Government is implementing its net zero policy risked angering voters if it pushes up the price of energy. He wrote in The Telegraph: “Getting energy prices down quickly is a political imperative if the necessary changes aren’t to become electorally toxic.”

Streeting accepted that some Labour policies had turned voters away from the party – telling GB News: “I’m not going to insult your viewers or the voters by pretending that winter fuel allowance hasn’t been an issue on the doorstep. It has. We’ve all heard that.

“In fact, I think pretty much everything that the Chancellor has done to raise the money needed to invest in public services like the NHS has been opposed by someone… We knew when we made those decisions that they risked being unpopular.”

Badenoch under pressure

Kemi Badenoch is under mounting pressure from senior Conservatives to explain how she will rescue the party from disaster after it lost hundreds of council seats to Reform.

Allies and potential rivals told The i Paper that there is no immediate prospect of the Tory leader being ousted despite rumours of donors plotting against her.

But MPs are anxious for a change in direction to win back right-of-centre voters who appeared to move en masse to Reform last week.

Badenoch told the BBC’s Sunday with Laura Kuenssberg: “We are going to come out fighting. We are going to come out with the policies that people want to see, but what we are not going to do is rush out and tell the public things that are not true just so we can win votes. This is not about winning elections – this is about fixing our country.”

She admitted it was “feasible” that Farage could end up as prime minister but insisted that big polling swings seen recently in countries such as Canada and Australia demonstrated there was a way back to power for the Conservatives.

The Leader of the Opposition said: “I need to come up with a plan that will deliver. Easy announcements and easy slogans are not a plan.”

One shadow minister warned that the “dreadful” local election result had been “worse than expected”, adding: “It feels very bleak at the moment. There needs to be a significant change of approach, but a leadership change now would be insanity.”

Another pointed to low turnout in last week’s polls but added: “We are all taking the result very, very seriously and will be discussing how we respond and what we need to do when we are back.” A third senior figure said: “These results are catastrophically bad for the Conservative party.”

‘Horrific’ results

Many Conservatives are braced for more bad news at future sets of local elections, including those for the Scottish and Welsh Parliaments next year where opinion polls currently suggest the party could be almost wiped out. A member of the shadow Cabinet said: “Anybody who is realistic knows that next year is going to be horrific as well.”

Multiple senior Tories dismissed the idea of a leadership challenge, pointing out that there are few possible leaders who are universally popular within the party. Robert Jenrick, who came second to Badenoch at the last leadership election, has backed her to continue.

Andrea Jenkyns, the ex-Conservative MP who was elected the Mayor of Greater Lincolnshire for Reform last week, suggested that high-profile Tories were flirting with defection to the insurgent party.

She told GB News: “Conservative MPs and former MPs have been messaging me. We’ve got former ministers who’ve been contacting me, asking ‘what is it like inside Reform?’ And I do feel we’ll see more defections. But do you know something? We’ve got to have the right people with the same values who believe in Nigel.”