Starmer ready to seize the initiative in race against time to save his leadership

The Treasury is also considering how to fund the abolition of the two-child benefit cap and whether to scrap the pension triple lock. The government is looking for ways to shift the burden of taxation from income to wealth, and redistribute resources between rich and poor and across the generations. Meanwhile the prime minister is set to announce that the UK will formally recognise the state of Palestine.

As discontent swirls around the Labour leader, Starmer is slowly but surely embarking on a political course correction. “Keir is one of the most values-driven people I know,” says a cabinet minister who is close to him. “He knows what he believes in. Now he has to show that to the party and the country. We’ve got to do better as a government.”

After a torrid fortnight – during which Starmer lost his deputy, his ambassador to Washington and his director of strategy – the prime minister is “in deep trouble”, according to one senior Labour figure. “The Mandelson mess is symptomatic of Downing Street’s incapacity for direction or strategy – despite the multiple lieutenants with the words ‘director’ and ‘strategy’ in their titles,” the source says. “He can’t duck this. It’s febrile.”

A former minister thinks the situation is “terminal” for the Labour leader. “He was dealt a bad hand but he’s also played it so badly. The parliamentary Labour party is incandescent.” A Labour peer says: “Unless something changes, Starmer will be gone by the end of next year. He’s neither a politician nor a leader.”

The anger at Westminster is echoed by disillusionment around the country. According to the latest Opinium poll for The Observer, Labour is down to 22%, nine points behind Reform UK. More than half of adults think Starmer should resign and over a third of Labour voters want the prime minister to quit.

Morgan McSweeney, the prime minister’s chief of staff, is also in the firing line – but the division that really matters is over political direction rather than personnel. “I think Keir can survive,” says a Starmer ally. “The government is in a deep dive not a fatal tailspin, but the problem is there’s still a strategic dysfunction.”

The McSweeney strategy – which delivered Labour’s “loveless” election landslide, but has failed to retain support – has focused on winning back voters who are switching to Reform. This led to the “island of strangers” speech, which Starmer subsequently repudiated, and a summer of announcements on immigration.

Other senior Labour figures, including some around the cabinet table, warn that the “obsession” with Nigel Farage has left Labour’s “progressive” flank exposed. Data from the British Election Study Internet Panel, released last week, shows that only 49% of those who voted Labour in 2024 say they would still do so. Of those who switched party, 9% have gone to the Liberal Democrats, 8% to the Greens and 1% to Plaid Cymru or the SNP. Only 8% say they would now back Reform, according to analysis by the data scientist James Breckwoldt.

As the Liberal Democrats meet for their annual conference in Bournemouth, separate polling by More in Common shows Ed Davey’s party has the potential to take a quarter of Labour’s 2024 votes at the next general election. On top of the voters who have already defected, a further 17% of the remaining Labour supporters would “seriously consider” voting for the Lib Dems. The latest MRP model suggests that shedding progressive votes to the Lib Dems could cost Starmer’s party 52 seats.

Luke Tryl, UK director of More in Common, says: “There is no doubt Labour has to address the threat from Reform, both by convincing voters that Britain can be fixed and tackling levels of migration, but it would be a mistake to assume all of Labour’s problems can be answered by tacking right. They face an equal challenge with defections from their progressive flank.”

It is, he adds an error to assume that Labour’s Reform defectors are “averse” to its progressive priorities. “On measures around redistribution, tackling climate change, workers’ rights and nationalisation, the voters Labour has lost to Reform share the same appetite for these policies as voters who have drifted to the left.”

The Lib Dem leader is actively courting liberal voters. He refused to attend the state banquet for Donald Trump, got into a spat on X with Elon Musk and has accused Israel of committing genocide in Gaza. One Labour insider says: “Ed Davey is showing how easy it is to outflank Keir not on the left but in the centre, it’s not the Corbynistas he’s appealing to, it’s mainstream people who don’t like Donald Trump or football hooligan Nazis or Elon Musk undermining British democracy.”

The Lib Dems, who have doubled their vote share among 18-24 year old voters, are hoping to capitalise on discontent with Labour in urban seats at next year’s local elections.

Starmer’s party is also heading for a drubbing in May’s Scottish and Welsh polls. YouGov now puts Labour in third place in Wales on just 14%, with Plaid Cymru on 30% and Reform on 29%.

The conflict in Gaza has scrambled political allegiances. Jeremy Corbyn and Zara Sultana have had a spectacular falling-out, but 750,000 people signed up as supporters of their new party because they felt politically homeless. Zack Polanski, the new leader of the Green party, is hoping to win them over with his eco-populism, combining environmentalism with social justice.

Neal Lawson, founder of Mainstream, a campaign group backed by Greater Manchester mayor Andy Burnham, criticises the “hyper-factionalism” of the people around Starmer. “By trying to extinguish the left they’ve created this lop-sided creature,” he says. “All bets are off. Something has to change otherwise we are going to hand the country to Farage and destroy the Labour party in the process.”

The mood music around Starmer is changing. Downing Street’s preferred candidate for deputy leader, Bridget Phillipson, has denounced the two-child benefit cap as “spiteful” and Ed Miliband has seen off an attempt by McSweeney to remove him as climate change secretary.

At cabinet last week, the prime minister made a passionate speech about the importance of tolerance and liberal democracy following the Unite the Kingdom march led by the far-right agitator Tommy Robinson. He is planning to mount a defence of human rights laws and has made clear he has no intention of backing away from the government’s net zero commitments or new employment rights.

In his party conference speech Starmer will set out the choice between “decency and division” facing the country. One Downing Street source says: “There’s a difference between chasing after Reform and calling out Reform.”

Photographs by Kin Cheung/AFP/Getty, Sophia Evans, Marcin Nowak/LNP, Oli Scarff/AFP via Getty Image, Ian Forsyth/Getty Images, Wiktor Szymanowicz/Future Publishing via Getty Images