UK Labour Conference: Six signals from Liverpool

by Jon Rhodes

However it was dressed up, this week’s Labour conference was a test of Keir Starmer’s leadership. He needed to sketch the “vision” many feel is still missing, while also proving he could leave Liverpool with his authority intact. He managed just about enough of the former to secure the latter, but bigger tests lie ahead. With local and mayoral elections looming in May, Starmer is caught between lofty social and economic ambitions and the grind of short-term politics. The mood in Liverpool was telling: 2024 already feels like history, while 2029 looms as a worry. On paper, Labour’s huge majority makes the party look unassailable; in practice, the atmosphere was more anxious than triumphant. For Starmer, the mission is now brutally clear: show progress, limit losses, and stop Reform from turning disillusion into revolt.

1. From competent managers to moral stewards

Labour swept to power by promising to run the country more competently than the scandal-ridden Conservative Party. That was enough to win in July 2024, but it doesn’t wash now. A year and a half in, after a string of its own controversies and with the Tories in retreat, it is Reform UK that has emerged into the role of real opposition.

Starmer’s response is deliberate. Labour is now presenting itself not just as an efficient manager, but as a moral steward of public life. “Decency” over “division,” he urged, a clear swipe at Nigel Farage and Reform’s populist messaging.

The electoral logic is clear. Reform is polling strongly, but there may be a ceiling to its appeal: almost twice as many voters say they would never back Farage as those who would. By casting Reform as the single opposition in a moral contest for the nation’s soul, Starmer is priming a tactical voting strategy that keeps it out of power. And with Labour holding more than 400 parliamentary seats, it stands to be the main beneficiary of any anti-Farage mobilisation by the electorate.

But here lies the risk. If Labour’s positioning on immigration or standards looks too much like “Reform-lite,” it risks losing progressive voters who might otherwise vote tactically to block Farage. Damned from the left if he mimics Reform, and from the right if he rejects it, Starmer could end up with a muddled message, caught up by the very narrative he is trying to control.

2. Fiscal discipline as Labour’s anchor

A Labour conference is never easy for Chancellors. Members want bold, new plans, not lectures on bond markets and the need for fiscal rectitude. Gordon Brown famously navigated this by using his Monday morning slot to ‘pre-announce’ his Cabinet colleagues’ best policies – across health, education, transport and beyond.

Reeves sought to take a subtler approach by making the case for fiscal prudence whilst highlighting specific elements of progress already made; trying to thread the needle between cautious finance and party morale.

She repeatedly warned that Labour cannot lose market trust, must avoid reckless spending and faces tough choices in the upcoming November Budget. In this she chose credibility over applause. However, the political risk remains. Many voters want a step-change in public services, and left-wing activists will continue to push for bolder spending. Reeves is committing Labour to “slow reform,” in which patience is as important as policy.

Her speech wasn’t electrifying – she is never going to be a conference darling – but nor did it provoke open dissent.  For now at least, any internal criticism of Rachel Reeves is being kept off the conference floor and out of the public eye, a sign that members remain prepared to give her the space to navigate a cautious path. Whether that patience holds through November’s budget will be a much sterner test.

3. NHS Online: modernisation meets AI

The conference’s headline policy was NHS Online, a digital hospital aimed at delivering millions of extra consultations. It’s both a practical measure and a test: can Labour modernise the NHS without compromising its ethos?  AI featured prominently. Ministers highlighted AI-assisted triage, diagnostics and scheduling, framing technology as a capacity booster rather than a threat. The narrative is clear: public services can be modern, efficient and compassionate.

However, risks remain: digital exclusion, IT integration failures, staff buy-in and patient scepticism all loom. The government knows it must show digital health is additive, not a second-rate substitute. Success could set a model for AI across the public sector. But the benefits could take time to emerge – time a government under pressure and slipping in the polls does not have in abundance. Failure could undermine trust in both reform and technology.

4. The Burnham moment that wasn’t

The media arrived in Liverpool looking for drama. Manchester mayor Andy Burnham was cast as a soap opera-style protagonist, with Starmer “to be buried under the patio.” Headlines teased dissent and leadership intrigue.

But Labour doesn’t do regicide as well as the Conservatives. The party rarely replaces leaders mid-term and is all too wary of being dictated to by the media. By mid-week, the story shifted. Home Secretary Shabana Mahmood’s debut and the NHS announcement dominated coverage, while even Burnham himself admitted he might have jumped too soon: “There is no vacancy today.”

Nevertheless, the episode still mattered. It showed that media speculation can flare even without substance and it was the catalyst for many conversations about succession and which ministers might be on a future shortlist. Mahmood, looking authoritative in a tricky brief, and Wes Streeting, whose health reform role has boosted his profile both emerge with their reputations enhanced. Streeting also publicly backed Angela Rayner’s return – popular with the party faithful and potentially another nod to a future leadership campaign.

5. Migration: a tough turn with built-in contradictions

Labour’s harder line on migration is one of the clearest signs of how far the political debate has shifted. Shabana Mahmood’s announcement – longer qualifying periods, stricter language rules, mandatory community obligations, and a “crime-free” record for permanent residency – showed Labour is prepared to fight on ground long staked out by Farage and Reform.

The question is whether this is capitulation or realism. Is Labour letting Reform set the terms of debate, or simply recognising that across Europe, right-wing populism has dragged the political centre towards tighter migration controls? Either way, Labour is signalling it won’t cede the issue uncontested.

The risks are obvious. A tougher stance could alienate parts of Labour’s natural coalition – unions, younger voters, ethnic minority communities – that lean towards more open policies. Reeves’s proposal for an EU youth mobility scheme tries to balance this, easing short-term labour shortages and offering opportunity to young Britons while keeping permanent settlement rules tight. It is a hedged bet: restrictive to hold the centre, flexible enough to reassure key groups.

For business, the implications cut both ways. Sectors reliant on settled migrant workers face more hurdles, while industries looking for mobile, short-term talent may gain. The challenge is that the signals are mixed; a politics of toughness that reassures swing voters, but leaves firms unsure of where the line on labour mobility will finally be drawn.

6. Green transition: from moral cause to political compromise

Climate and energy policy was notably less prominent at this year’s conference than in previous ones, reflecting a pivot away from framing net zero as a moral imperative towards balancing it against economic and political realities. Ed Miliband, still the figurehead for Labour’s green agenda, defended net zero as under assault from a “culture war” driven by global right-wing interests, announcing a fracking ban and pledging to double clean energy jobs by 2030.

But the green transition has become fraught with trade-offs. Tensions with unions – highlighted by Unite’s Sharon Graham openly calling for Miliband’s resignation over oil and gas job losses — underline the political and party risks. Miliband’s counteroffer, a new “Fair Work Charter” for the green sector, is a clear attempt to shore up support among workers.

Meanwhile, speculation persists that the government may soften its stance on new North Sea licences in the upcoming Budget to preserve jobs and energy security. Such compromises illustrate how green ambitions are being reshaped by fiscal discipline and the need to blunt Reform UK’s populist advance. Net zero remains central for now, but it is increasing being reframed as an economic- growth strategy, not a moral cause.

What this means for business

For business, the conference underlined both opportunity and uncertainty. Starmer survived the week, but neither he nor his party left Liverpool looking unassailable. Despite Labour’s huge parliamentary majority, internal unease, rising pressure from Reform and geopolitical headwinds all point to governing getting harder, not easier.

For companies, that means engaging with a government that is under strain and short on time. Labour’s instinct remains fiscal caution and political risk management; promises of “slow reform,” pragmatic compromises on migration and energy, and a search for deliverable wins that can be banked before the May elections. Policy is being shaped less by long-term vision than by immediate pressures.

The imperative for business is to lean in now with solutions that help ministers deliver visible results quickly, within fiscal and political limits. Proposals that can be framed as cost-conscious, credible and aligned with Labour’s “decency over division” message will cut through. But firms should expect shifting signals, particularly on migration and energy, where short-term politics may override policy consistency.

The lesson from Liverpool is blunt: Labour has numbers in Parliament but not yet deep reserves of authority. Businesses that show they can ease the government’s short-term pressures while advancing longer-term goals will be listened to. Those waiting for a more settled context may find that moment never arrives.