Where Are Labour and What Can We Expect in 2026?

This essay is part of our New Year's series on what to expect in 2026 and can be downloaded as one compiled PDF via the download form. Thank you!

By Simon Jackson, Partner at 5654 & Company

“It’s going to get worse, before it gets better”. So said one Labour MP, recently, when asked by 5654 for a view on Labour’s prospects in 2026, echoing what the Prime Minister said on assuming office in 2024. That short summary is a fair representation of where many on the Labour side are in terms of their expectations for the Government next year.

No. 10 talk of the need to deliver, to start to make a difference to people’s lives and are hopeful that this is the way to revive their fortunes. The problem for them is that very little has been going as they hoped so far, with optimism in their own ranks dwindling.

This was never going to be an easy year for the Government. Despite their huge Parliamentary majority, the prevailing circumstances - a difficult economy, numerous tricky domestic and international issues, combined with a gloomy public mood - suggested a year of tough decisions and the hard, serious business of government. However, even the Government’s loudest cheerleaders would surely accept that things have been worse - much worse - than expected.

Keir Starmer ends the year as the most unpopular Prime Minister ever, according to recent polling. That’s a very uncomfortable place for any Prime Minister to be and explains the angst bedevilling the Parliamentary Labour Party. MPs are worried, very worried; they fear the circumstances that delivered their ‘loveless landslide’ - a public willing and able to turn, quickly, against incumbent politicians who aren’t meeting expectations - could feasibly sweep them from office at the next election.

While Labour, and the Prime Minister, remain this unpopular, leadership speculation will continue. The recent Budget has helped Starmer’s position in the short-term, but the next moment of potential danger isn’t far away, with many Labour people expecting a bad set of results in the May elections. Make no mistake, these elections - with Senedd, Holyrood and English council seats up - are a huge moment for Starmer. Labour is fighting on all sides, challenged from left and right. Not too long ago, there were hopes they could be resurgent in Scotland, embedded in Wales and making gains in England. But the polls today suggest they could go backwards in all three.

If May is terrible for Labour, expect more talk of a leadership challenge to Starmer. That could come, but don’t bet on it. Action demands Labour’s MPs to move - they must identify a candidate, find 80 of their number to publicly call for a leadership contest and then they have to win it.

And while Labour MPs are currently big on grumbling, they have less of a record for regicide. Given this, and the fact that there is no outstanding alternative leader ready and waiting to go, the safest bet is on Starmer being in office this time next year. Changes elsewhere - whether in focus, policy or personnel - may well be inevitable should the current unpopularity persist.

While the Prime  Minister’s survival prospects will be a big part of the story, next year, what hope for something a little more optimistic? Well, hope is the key word if you’re in No. 10.

Some of those closest to the Prime Minister talk about the challenge of restoring hope: to the country and its people. According to them, part of their dilemma is a general sense of lost hope and optimism. They accuse the last Tory government of ‘killing hope’, with lost years for improving living standards, failing public services and a general acceptance that things are always going to get worse. The answer, they say, is restoring hope through incrementalism: making a difference to people’s lives through choices and delivery.

Labour high command’s hope is that, as they knuckle down to the business of government, they’ll start to show real improvements. They point to investment in the NHS delivering more appointments and falling waiting lists; a promise of more apprenticeships; the filling of pot-holes; childcare improvements; and, they hope, a rise in living standards after years of flatlining, driven in part by the Budget’s focus on reducing inflation. Together, they hope that this will start to turn the tide.

It's through a relentless focus on tangible delivery - or ‘ripples of hope’ as one senior strategist described them to 5654 - that Labour hopes to turn its fortunes around in 2026. Objectively it’s a plan with logic behind it; polling tells us the public want change on issues. The test though isn’t so much whether Starmer’s prescription is the right one, it’s whether he is able to deliver the necessary medicine. 2026 will go a long way to answering that question.