Category Archives: Elections

Barriers to the Reform-quake

GK’s James Allan assesses some of the barriers of populism in British politics and explains why the political hype about Reform UK might be overstated

‘Campaigning is different than governing’ – so said President Obama to reporters on Air Force One in a targeted message to Republicans looking to gridlock his legislative agenda on Capitol Hill. The same goes for any political organisation that looks to exploit grievances and stir up public anger to secure votes and electoral support. It was a dynamic at play in the 2016 Brexit referendum and Reform UK is reviving the grievance playbook in the lead up to the next election.

How the Labour government, and the Conservative Party in opposition, respond and deal with the challenge posed by Reform UK is undoubtedly shaping the course of this parliament. The government published its immigration white paper only moments after the local election result and the so-called ‘Reform-quake’ that saw 677 Reform councillors elected. As noted in last month’s newsletter, the government’s political objectives were clear: to appear tough on immigration, shatter the public perception of Labour being pro-asylum and pro-migration, and outflank Kemi Badenoch and Nigel Farage.

With all the subsequent political and media crystal ball gazing about the future of Reform UK, it is unsurprising that investors and businesses are curious. Importantly, the next election is likely to take place in the second half of 2028 or at some point in 2029. It is too early to predict the outcome meaning current polling warrants cautious interpretation. Amid the uncertainty, it is worth stepping back to consider why the political hype about Reform UK may be premature.

Four reasons why the Reform panic is overblown

1. The UK is bucking the global populist trend

The year 2024 was mega for elections across the globe. It was a year that largely saw incumbents punished for achieving marginal levels of economic growth, governing during a global health pandemic, and a cost-of-living crisis. This created opportunities for the ring-wing populist parties that sought to challenge to status quo, capitalise on grievances and promise radical change without providing credible plans for doing so. However, unlike most swings experienced in other western developed democracies, the UK swung to the left. The election of a Labour government brought an end to 14 years of Conservative governments.

The UK’s anti-incumbent sentiment at the election meant that one in four Conservative voters in 2019 went to Reform UK and one in five went to the Labour Party. This indicates a more fragmented split in the national vote and the UK’s first past the post electoral system means that Labour’s majority should be understood as broad but thin. It reflects a characteristic of our electoral and constitutional DNA that makes it harder for third, fourth and fifth political parties to perform well and win seats at general elections, including a right-wing populist challenger party. The bar is therefore high for Reform UK. It would need to overcome this fragmentation and more comprehensively supplant the Conservative Party to succeed.

2. No party has ever lost a 174-seat majority in modern British political history

Starmer’s majority is the third largest landslide win since the turn of the 20th century. From 1945 onwards, history would suggest that majorities such as this typically endure at least one more election before the colour of government changes. Labour’s majority of 145 in 1945 survived one other election before being unseated and its majority of 179 seats in 1997 endured for two more elections. The Conservative majority of 144 in 1983 also endured for two more elections and was whittled down to a majority of 21 before the party was catapulted out of power.

Historical precedents should be taken with a pinch of salt. The third-party challenger in all these elections were typically the Liberal Democrats (or its predecessors). A more fragmented electorate and Reform UK could challenge this historical precedent but even its predecessor UKIP never won any seats in the House of Commons at its peak in 2015 despite holding a number of seats in the European Parliament elected under a proportional representative system. This further underscores the difficulty these challenger parties face.

3. Grievance politics only gets you so far

Reform UK’s playbook of grievances is blunt and polarising: immigration and borders; issues of national identity and community cohesion; taking on establishment orthodoxy and perceived elite indifference; and underscoring the cost of net zero policies. Playing on grievances can mobilise discontent, and without credible solutions, Reform UK will struggle to translate its momentum into enduring political support.

The coming years will be a test of Reform UK’s operational effectiveness, party discipline and credibility in local government. Its success at the May local elections is significant. It won 677 council seats out of roughly 1,600, took control of ten local authorities and successfully elected two mayors. But beyond the grievances espoused by its candidates, Reform UK’s credibility is now at stake and already showing early signs of dysfunction. For instance, Reform UK-controlled Kent County Council recently suspended a councillor and nine of the 22 council meetings have been cancelled within the first nine weeks of them gaining control. These are meetings where important decisions, such as budget allocations and service provisions were expected to be made.

Local government plays a vital role in the operational delivery of frontline local public services that most of the electorate use and engage with. From adult social care and children’s services, to bin collection and public protection, a lot is at stake for Reform controlled local authorities. Political leaders in Westminster will be watching closely to exploit any opportunity to batter Reform’s credibility. Added to this is immense pressure on local government finances, meaning that any misstep will be amplified. Reform UK not only has to prove it can win votes but also that it can govern responsibly under intense scrutiny and fiscal constraint.

4. Expect mid-term blues

It is reasonable for voters to flirt with protest parties between general elections and Reform UK is likely to maintain its momentum in local elections over the course of this parliament. Local elections offer a safe outlet for public frustration, but general elections are different. Not only will voters who are less politically engaged (or enraged) turn out to vote in a general election, but the national conversation will shift from registering voter discontent to who can govern the country effectively. It was a dynamic in 2024 and a key part of Starmer’s pitch to voters, citing his record of restoring Labour’s credibility from the Corbyn era of Labour leadership and criticising the Conservative’s mismanagement of the economy.

While Reform UK may have reshaped the political conversation, structural barriers and historical precedents mean that translating this discontent into enduring electoral support that can survive the test of a general election will be a significant challenge for the populist right-wing party.

Westminster in 2025: Policy Shifts and Political Risks

GK is delighted to present its ‘Westminster in 2025’ report which sets out the key policy shifts and political risks we are expecting to see over the coming 12 months.

The report can be accessed here: Westminster in 2025 – Policy Shifts and Political Risks

The £0.5bn revenue raiser, incurring the wrath of farmers

GK Senior Adviser James Allan visited the farmers protest in Westminster and assesses the likelihood of a government u-turn and its agriculture policy plans.

On 19 November, farmers were out in force and took to the streets of Westminster for a heartfelt protest for a sector that feeds the nation. At the autumn budget, the Chancellor Rachel Reeves introduced a cap of £1m for assets eligible for Agriculture Property Relief and Business Property Relief. Estimated to raise £0.5bn a year by 2029/30 for spending on public services, the measure has been dubbed a ‘family farm tax’ for farmers that “don’t do it for the money because there is none”.

The extent to which the Chancellor’s action equates to a “death knell” for the family run farm is somewhat contested. While the Country Land and Business Association estimates 70,000 farms will be impacted by the change, various policy wonks and tax specialists argue that this does not consider other reliefs and is based on the quantity of farms, rather than ownership structures. Disputed figures aside, it risks fueling a shift public opinion against the government and one of the shortest-lived honeymoon periods for a new Prime Minster. A survey carried out by JL Partners found that 53% of respondents felt the autumn budget was unsuccessful, so the farming community are not alone.

Is this Reeves’ Cornish pasty tax moment?

When then-Conservative Chancellor George Osborne introduced a 20% tax on hot foods to end VAT anomalies in 2012, few anticipated the political drama of “pastygate” which ensued. The Conservative government was criticised for being out of touch, with some commentators even alleging class war. Then Prime Minister David Cameron was caught out for saying he’d eaten a pasty in Leeds Railway Station when the West Cornwall Pasty Company duly noted that the pasty outlet had closed two years previous. The controversy detracted from Osborne’s budget and ultimately led to a government u-turn and a negative with 49% of people describing the government’s handling of pastygate as a “shambles”. In a similar vein, the political fallout from this protest will be difficult for the Labour government to manage. Whatever Reeves’ next move, pastygate demonstrates that u-turns are not unprecedented when public opinion moves against a pinch point policy issue.

Beyond the political drama

Politics aside, the protests cut to the core of several interrelating policy issues, chief among them food security. Should farmers up the stakes and choose to strike, the government has already confirmed contingency plans to mitigate against likely food shortages. Any disruption to already fragile “just in time” food supply chains, which are a hallmark of the British supermarket industry, would have an immediate knock-on effect for the consumer, and in turn, the voter. This year of global elections has demonstrated that voters do not reward incumbents when food prices rise.

Yet given the 60/40 split of domestic and imported food produce respectively, the issue of food security is both desperately domestic and international. Russia’s invasion of Ukraine not only led to record levels of food inflation, hitting low-income households the hardest, but also a decline in business investment in the UK food and drink sector. Then there’s the issue of climate change. While India and Pakistan account for roughly 46% of UK rice imports, the government acknowledges that India is increasingly a climate vulnerable country. In short, a greater dependence on food imports arising from a possible collapse of domestic farming exposes the UK to yet more unpredictable geo-political and climate risks.

The British farming sector does not operate in isolation; it is critical to the UK’s broader rural economy, supporting industries such as agricultural machinery, agri-tech and innovation, and food processing. More than this, farmers are custodians of the UK countryside, contributing to environmental goals of biodiversity, carbon sequestration and sustainable land management and forestry. Though contentious, the Chancellor’s action prompts a broader conversation about agricultural reforms which align with national priorities and ensures the voice of the farming community is heard. The government has yet to set out substantive details but spoke of a new deal for farmers during the election campaign. Now in government, Defra Secretary Steve Reed has signalled a focus on trade deals undercutting low welfare and low standards; maximising public sector purchasing power to back British produce; and a land-use framework to balance nature recovery and long-term food security.

Whether Reeves doubles down or pivots on the Agriculture Property Relief depends on the government’s willingness to expend political capital to defend its decision. Labour’s instinct will be to fight on but the party finds itself on new ground. Its broad but narrow majority is part contingent on non-traditional Labour voters, many of them in rural areas. The MPs in these constituencies will have their eyes on a 2029 general election. Maintaining the rural vote and positioning Labour as the party of both rural and urban communities will be a challenge for the government. How Starmer and Reeves handle the ‘family farm tax’ could well define this iteration of the Labour Party. For investors and businesses alike, keeping abreast of these political battlegrounds, and preparing for the associated commercial risks and opportunities, will be important in making the case to a government that might well bend to a shift in public opinion.

Across the pond – Insights from our US partners

Mark Linton is a public affairs expert working with clients on US regulatory forecasting and scenario planning. He is a former senior appointee in the Obama Administration and a CoFounder of Hummingbird Advantage, a national public affairs consulting firm working with startups, investors, and established brands to help them win on their top causes.

Q: If you were a betting person, who would win the US election tomorrow? 

A: I would rather be Kamala Harris than Donald Trump. The Vice President has a higher overall ceiling of support among the electorate and a better field operation (to contact voters and get them to the polls). Having said that, the race is exceedingly close and it’s very possible Donald Trump could still win.  

Q: Which campaign do you think has received the largest donations from investors? 

A: America’s lax campaign finance laws make it incredibly hard to know this, given the proliferation of spending by outside political action committees (PACs) and interest groups, many of which have few disclosure requirements. Donald Trump has received a significant amount of dark money support including from major VC players who back crypto.   

Q: What does each candidate mean for international investment into the US? 

A: The care economy, healthcare: If Kamala Harris is elected and Democrats control both chambers of Congress, we would expect to see a concerted push to enact paid family and medical leave, an area where the U.S. lags compared to most European countries. Vice President Harris has also proposed expanding subsidies to help cover health care costs and in general strengthening the Affordable Care Act. 

Renewable Energy: Even if Donald Trump is elected, it will be hard – and politically unpopular – to claw back the billions of dollars that have flowed to states for renewables and climate adaptation through the recently passed infrastructure law (the Inflation Reduction Act). We’d expect to continue to see interest in clean energy, upgrades to the nation’s grid, and a focus on new technologies ranging from microgrids to carbon capture and removal.   

Q: What is the most favourable election outcome for US investment into the UK? 

A: Kamala Harris will bring a high degree of stability and competence to the White House. For that reason, many business leaders have privately signalled their preference for her as America’s next president. By contrast, most analysts predict a period of heightened political instability at home and abroad if Donald Trump is elected. He has pledged to start a trade war and weaken American alliances e.g., NATO, that undergird much of the western international economic order. A second Trump presidency would also lead to sustained domestic unrest, including potentially general strikes depending on the severity and reach of any unconstitutional orders he gives to the military and federal law enforcement agencies.    

Q: Top three sectors which will benefit from Trump and why? 

 A: This depends on his early executive actions, of course, but it’s reasonable to expect that crypto, oil & gas, and defence sectors will do well.  

Q: Top three sectors which will benefit from Harris and why? 

 A: Health care, renewables and housing are three sectors that will potentially benefit from existing and new subsidies and tax credits that a Harris administration would likely pursue.  

Q: Most likely candidate to want to negotiate a full fat trade deal with the UK? 

A: Both parties are focused on striking trade deals that favour American workers and, in the case of Kamala Harris, include robust environmental and labour protections. Add in Donald Trump’s threat to start a trade war and apply across-the-board tariffs, and a full fat trade deal with the UK seems unlikely in the near term.  

Q: If Trump is elected, how might US protectionism evolve in the next four years?  

A: It will get worse – if we take Donald Trump at his word to pursue a maximally protectionist set of trade deals and apply across the board tariffs.  

Q: If Harris is elected, how might economic policy diverge from that of Biden and the Inflation Reduction Act? 

A: Depending on the makeup of the next Congress, we’d expect to see new gains for the housing and healthcare sectors, a boost in consumer spending, and, potentially, new regulations in the tech space.  

Q: What happens to the Republican Party if they lose in November? Should fears of civil unrest be taken seriously? 

A: Since the Big Lie in 2020, most elected Republicans have unfortunately embraced baseless lies about the integrity of the US election system, despite it being the most secure and transparent in the world. We know that Donald Trump will not go quietly into the night if he loses. The real question will be how far along elected Republican officials follow him, especially if protests become violent. The best scenario is that an electoral blow against political extremism resets some of the political incentives – in the immediate and longer term – and we begin to see Republican officials join many other voices in calling for calm and support for the rule of law. It will not be surprising if at least some investors and business leaders also add their voices to urging calm.  

Q: Who are the future Democrat heavy weights should Harris lose?   

A: The Democratic Party has no shortage of talent; from current Biden administration cabinet officials to members of Congress and successful Governors. Kamala Harris will have a deep bench to draw from for her cabinet if she is elected president. If she falls short, the Vice President is in good company with an array of incredibly gifted Democratic leaders, many of whom will presumably decide to run for president in four years.   

Q: How will the makeup of the Congress impact policymaking under the next President? What will be the key political priorities and barriers? 

A: If both chambers switch – Democrats take the House while Republicans take the Senate, which is a distinct possibility, the question becomes: which major policy areas can garner enough bipartisan support to compel members to pass legislation? Some areas where the political incentives potentially align for bipartisan legislation include the regulation of social media platforms (and possibly AI); some form of paid family leave; defence and some foreign aid.  In addition, if Congress doesn’t renew the Farm Bill soon after the election (in a “lame duck” session of Congress), then the next Congress will have to, regardless of which party controls each chamber.  

Is Starmer Taking a Risk in His Attempt to Broaden Labour’s Appeal?

GK Advisers Noureen Ahmed and Felix Griffin reflect on Natalie Elphicke’s defection to the Labour Party and what this could mean for the Labour Party ahead of the next general election.

Keir Starmer is keen to exploit divisions within the Conservative Party, but is that enough to convince voters that Labour is a government in waiting?

When MPs took to the Common’s chamber for Prime Minister’s Questions on 8 May, we witnessed Natalie Elphicke defect to the Labour Party – the third Conservative MP to do so during this parliament. As a right-wing MP and vocal critic of Labour’s policies, Elphicke’s defection came as a huge shock to many in Westminster. Elphicke has previously accused Labour of being soft on issues related to human rights and immigration. As a result, there have been concerns from several Labour MPs that Labour’s commitment to tackling those issues could be undermined by her admission to the Party. Starmer’s willingness to embrace a defector from the right of the Conservative Party suggests a strategy aimed at broadening Labour’s appeal to Conservative voters, even if it means alienating the party’s left flank and risking Labour’s reputation on key issues such as social justice. This approach has sparked awkward questions about how far Labour’s leadership is willing to go to win Tory votes.

Labour’s strategy may be effective in the short term, creating a perception of decay within the Tory government and encouraging Conservative voters to switch allegiance. However, the success of the Greens and some independent candidates in recent local elections indicates that anti-Tory sentiment does not necessarily translate into enthusiastic support for Labour. To be truly successful, Labour will need both an appealing policy platform to secure votes at the general election and firm support across parliament.

While further defections may seem unlikely, they should not be ruled out entirely. As Sunak continues to face criticism that he is leading an increasingly chaotic government, it is evident that Labour will do everything it can to secure the victory it has long yearned for.