Blain’s Morning Porridge June 22^nd, 2026 – Après Starmer, le rain-shower…?

“The king is dead. Long live the King.”

Poor old Sir Keir Starmer. Wrong man in the wrong job. So much hope now squandered. But its important not to over-think or over-worry what comes next. In Gilts there is truth and the 10-year yield is still south of 5%. Andy Burnham needs to prove himself a leader and demonstrate ideas and action. Is that too much to ask?

LINK TO PODCAST

There is little surprise that Sir Keir Starmer is now expected to resign – setting in motion a transfer of the UK premiership to Andy Burnham, the former Manchester mayor who won his way back into the Houses of Parliament last week. Starmer’s exit is being painted as proof that political instability is now built into the current UK political system – triggering a wall of worry among the commentariat about the Gilts Market and Sterling – what will the markets think of the seventh Premier in 16 years? Will the threat of increased borrowing and spending plans trigger market wobbles? And, how sustainable will the new government be?

Regular readers will be familiar with Blain’s Virtuous Sovereign Trinity Theory: Any nation with a stable currency, a sustainable bond market, and political competency will tend to do well. If any of these three legs wobbles, then problems quickly become a crisis. After years of political omni-shambles, there were great hopes the Labour Landslide of 2024 would translate into a period of calm and growth as the nation was realigned.

Er… didn’t quite work out that way…

On the other hand, it’s important to remember Britain is not defined solely by our dysfunctional politics. There are serious economic problems that need to be addressed… but generally, the UK is far from a complete basket case. Growth might be modest, productivity low, but employment is high. The UK remains inventive and innovative, with a strong UK’s financial services sector and superb universities. The UK wields more soft power than any other nation of its size. Prime ministers rise and fall with monotonous regularity, but otherwise our system sort of works!

To understand what’s likely to happen next in UK, we have to understand why Starmer was such a disappointment and how he failed. Is it possible Burnham will simply follow a similar disappointing path?

Starmer has fallen for 3 reasons.

First-up, it’s important to put Starmer’s election in context:

After 14 years and 5 Tory Prime Ministers of varying ineptitude fighting over the wreckage of Brexit even as the nation went into steep post-Covid decline – the UK was desperate for change. The Tories survived as long as they did because Labour, under Jeremy Corbyn’s Looney Left Circus of Woke, was hopelessly unelectable and had failed to mount any effective opposition or push back on the Tories. That lack of political pressure enabled the directionless dither of May, Boris and the Madness of Truss and fuelled the internal bickering that led to so many leadership challenges. (Rishi Sunak’s regime was basically the janitor waiting to hand over the keys…)

In the wake of Corbyn, what Labour needed was a strong, effective, pragmatic leader, with a clear programme for office to rebuild the credibility of Labour with the electorate. Instead, what the country got was Starmer – one of the few adults in the Corbyn regime, a highly competent lawyer, who’d risen to the surface of his troubled party almost unnoticed. He got to the top because Labour lacked a bench of talented leadership contenders. In a showroom full of Lada’s, even a Vauxhall stands out.

The second issue was how Starmer went on to prove he was not the charismatic leader with the vision and energy to address the UK’s multiple problems. His 2 years in power left him looking like a stunned rabbit in the headlights – overwhelmed by the scale of the task, unable to prioritise the issues, solving nothing. Veteran political commentator David Dimbleby recently called him a “dud” – the most damning but fair assessment of his fitness for the task.

The third issue is that the new Labour Government elected in July 2024 never understood how politics has changed. Their cadres of new MPs from the Red Wall joined a party that naively expected a repeat of the polite political era of the 1990s. Instead, they got clobbered from the get-go by Blitzkrieg politics, the news being wielded like a cudgel to undermine, question and break confidence in the new Government. No one in communications seemed to understand how the newly enabled populist right wing under Nigel Farage was using vast sums of money from a small number of right-wing supporters to build the base for a future Reform government. For Reform to win it had to build up resentment and distrust in the conventional political parties – which it has successfully done with limited oversight.

Starmer and his side-kick Chancellor Rachel Reeves found themselves not leading through effective new polices, but constantly on the defensive from the opposition benches and the right-wing media – who conveniently persuaded the nation to forget they’d been in power for the previous14 years, creating the very issues they thundered about Starmer’s inability to solve!

Every policy announcement was undermined – unwise and poorly iterated policies like the winter fuel allowance or taxing farmers became make or break issues, distracting from political objectives. No 10 failed to address the increasing polarisation of Parliamentary process or effectively counter the rise of the Populists. To criticise them “a denial of free speech”. They failed to win the moral high ground of setting policy and the inequalities in the system went unaddressed. The dither quickly became apparent to the backbenchers. When they smelt weakness, Starmer was doomed, unable to cut the ballooning welfare bills or discipline his own party.

Starmer and Reeves lost the plot – beaten by a combination of their own inadequacies, by being in the wrong jobs, and failing to understand or be ready for the new politics of hostility, partisanship, disinformation and naked power.

Will Andy Burnham be any better?

At this point it’s important to note that Labour has been quietly getting on with improvements to the nuts and bolts of Broken Britain. It’s a slow process. The planning system is being reformed, they’ve engaged with the unions, the relationship with Europe has improved, they’ve pushed through workers rights, and they’ve put together something that may emerge as a joined up national energy strategy. But none of these things really register with voters or the markets. What Burnham will need is to show he can lead.

Far from telling a Prime Minister what he should do – there are three easy and long-term positives Burnham could do to demonstrate leadership and show that he has a agenda to the electorate and the markets:

• Address the NHS. The health service is the ravening maw at the heart of the UK economy, consuming 10% plus of GDP. An ever increasing amount of capital is being spent for miniscule gains. What is needed a second Beveridge Report to redefine it from snout to tail. I would suggest Burnham appoints a cross party, Royal Commission to set out a new vision for the NHS together with a sustainable funding regime (which considers issues of how to pay for it – for instance a form of health insurance.) It would clear strategy on AI, prevention and care. I would suggest someone of the quality of former Tory Chancellor and Health Minister Sir Sajid Javid to lead it. There remit should be a report within 3 years.
• Address housing. What the UK does not need are the Private Homebuilders sitting on 1.4 million unbuilt homes waiting for house prices to rise. What we need are millions of affordable and social rental apartments in Cities now. A massive programme of social housing (to replace the housing stock sold off under right to buy), could kick start the economy. It could be done off-balance sheet – as I’ve written about previously in the Morning Porridge in terms of Social Housing Fund set up a bank.
• Fund Defence – the potential multiplier effects of setting up the UK to invent and innovate the kind of war-space winning tech we are seeing in Ukraine and elsewhere to re-establish the deterrent effect of our armed forces, and to rebuild strategic resilience, could be huge. Security is also a critical duty of government – if we don’t pay 5% of GDP now for deterrence, we’ll be paying far more when the bombs start falling! Paying for it will involve borrowing more and spending less on Welfare.

Burnham will inherit a political mess. It remains to be seen if he emerges as real leader or another ditherer. Watch this space.

Out of time and back to the day job…

Bill Blain

Author of the Morning Porridge
CEO Windshift Capital
Advisor – Spitfire Strategic Capital

Meanwhile, don’t forget about my new book:

The Battle For Hamble is a proper grown-up examination of how bureaucracy has failed: a tale of Greedy Corporates, Bad Planning and Economic Illiteracy. It explains how a wholly unnecessary Gravel Quarry will be dug in middle of a prosperous village – putting 6000 jobs at risk. The truth is no one wants gravel, and the quarry company understands it’s not what you dig out, but what you stuff back into a hole in the ground that matters. Gravel sells for £30 a tonne – Landfill earns £150 a tonne to bury. Go figure.