In probably the most dramatic week seen in Parliament since Liz Truss was forced to resign, the ramifications of what has happened this week, will reverberate for some time yet. But in summary:

• The Government had proposed to make 5 Billion in savings through welfare reform
• The size of the backbench rebellion was such that they faced a humiliating defeat and were forced to climb down, blowing a hole in their financial strategy
• This led to Starmer being asked if he had full confidence in his chancellor for the life cycle of this parliament, and declined to do so
• Her reaction was visible, equally just as pertinent was the spike in the bond markets, which subsequently forced Starmer into an about turn

And what next?

The combination of the failure to hit the growth forecast, whilst also failing to make the budgetary savings sought for, mean that tax increases are now inevitable. The big question will be where.

It is debatable whether the Government can increase tax on business any further, in a way that increases tax receipts. Similarly, the Chancellor is having to revise policies around HNWs on the basis that the policy is backfiring. Therefore, it can’t be discounted that she is forced to revise her policy to not increase tax on ‘working people.’

In the meantime Zarah Sultana has announced she will be forming a new party with Jeremy Corbyn, which has the potential to split the left wing vote, depending on how much traction they get. And the Conservatives are seen as such a toxic brand, they are struggling to have any relevant.

Against this backdrop, Farage is gaining traction, and the latest polling suggests that Reform could win a parliamentary election, through splitting both the Labour and Conservative vote. Indeed, in over 100 seats at the last election, it was Reform in second place. And the challenge facing Labour, is that the increasing consensus is, that their policy framework is not working, and the fact that the Prime Minister was not prepared to publically back his Chancellor, leaving her in tears on TV, only to backtrack when the markets spiked, signifies a person who lacks an understanding of his situation.

The size of the parliamentary majority means it is unlikely the Labour party have any major issue before the next election, equally Farage is becoming the clear favorite to be the next Prime Minister, which will cause much consternation across the political spectrum and also means the Labour party has no room for any further mis-steps. Whether they can manage that is another question.

The next event to look to will be the Autumn Budget. Roll on November 2025!

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