Starmer stands up to his frenemies

Keir Starmer showed some backbone in the face of altercations with frenemies, Paul Montague-Smith, senior counsel – public affairs at MRM writes. But the Government’s docket is looking evermore frenetic as a busy February rolls on.

The rollercoaster has certainly continued into 2026. If Keir Starmer was hoping for a gentle start to the year, he will have been sorely disappointed.

The US President’s threat to impose 25% tariffs on his NATO allies if they didn’t roll over to his demand to gain control of Greenland caused a major international crisis in which the UK was a pivotal player.

Personally, I thought that the Prime Minister rose to the challenge well, alongside the EU. The EU was clear that it would take retaliatory measures if needed, while the UK chose a more diplomatic route but with a similarly steely resolve. The combination appeared to work.

Keir Starmer even had a Hugh Grant in ‘Love Actually’ moment, making crystal clear to the US that, while we value our ‘special relationship’, some principles are non-negotiable and on which threats or bullying tactics won’t work.

Whether you think TACO (Trump Always Chickens Out) is a merited moniker or not, the President’s modus operandi is to go so big, in a shock and awe way, that rowing back gets him to where he wants to be. NATO members, having previously been pushed to increase their share of defence spending, are now also committed to taking action to ensure the arctic region is secure.

It’s rare that the US President comes close to an apology, but having downplayed the role of NATO troops in Afghanistan and doubting whether the alliance would be there for the US “if we ever needed them”, he had to eventually acknowledge and praise the role of UK forces, hundreds of whom lost their lives in the conflict.

With another international crisis seemingly averted, the Prime Minister was also faced with handling the renewed manoeuvrings of the ‘King of The North’, Manchester Mayor Andy Burnham. Burnham, who has twice stood for the Labour Leadership unsuccessfully, clearly wants another shot, to be eligible for which he needs to be an MP.

With Manchester MP Andrew Gwynne announcing he would be standing down for health reasons, Andy Burnham made clear he wanted to become the Labour candidate, posing a problem for the Prime Minister – clear the way for a potential usurper, or block him and maybe create a martyr?

Polling suggested that only Burnham would have a chance of beating Reform in the by-election. Labour’s National Executive Committee – with a majority supporting the PM – blocked Burnham’s move.  

It was, on balance, probably the best thing to do. While Burnham may have won the seat, it would have forced an expensive mayoral election that Labour could lose. Bluntly, the mayoral job is more important than one parliamentary seat out of 650.

More importantly – certainly for the PM and perhaps for stable government – had Burnham stood and been elected it would inevitably lead to immediate and intense speculation about a leadership challenge, which would never end until resolved one way or another.

The decision, though, has riled leadership critics on the backbenches and within the party membership. Burnham must have known he would probably be blocked and likely calculated it will play into his hands down the line.

Alongside this the Government has been pulling its U-turn handbrake again, twice. The Prime Minister himself announced last September that you wouldn’t be able to work in the UK without having a mandatory digital ID. It now turns out you will be able to.

And the Chancellor has had to row back on her Budget plans once again, with an extended business rates relief scheme for pubs and live music venues who were saying planned increases, despite the mitigating measures already in place, would force their closure.

Yet again then, the headroom that the Chancellor built up in the last budget is being eaten into, bit by bit. There was some good news in that public borrowing in December was £7 billion lower than last year due to a higher tax take. But over the nine months since the start of the new financial year the Government borrowed £140 billion, down by just £300 million on the previous year.

There has been a series of adviser appointments in an effort to support the Government on its plans. Axel Heitmueller, a former health adviser to the PM, has been appointed as ‘Head of the Prime Minister’s Delivery Unit’ and ‘Expert Adviser on Delivery’.

The Chancellor has appointed Baroness Katie Martin as her business adviser. Although having previously been the Chancellor’s Chief of Staff in government and opposition, her business experience is limited and she has more of a media and communications background, so is likely to focus on developing and managing business relations rather than business policy.

Two new ‘AI Champions’ have been appointed to help the City seize the opportunities of AI to drive growth. Harriet Rees from Starling Bank and Dr Rohit Dhawan from Lloyds Banking Group will report directly to the Economic Secretary to the Treasury.

Their remit is to ensure firms can seize the opportunities AI presents “with confidence – improving customer outcomes, boosting productivity and competitiveness, and maintaining trust, resilience and strong consumer protection – while reinforcing the UK’s position as a global hub for financial services, technology and investment.” 

No coincidence that the announcement was made the same day that the Treasury Committee published a report saying the approach to AI in financial services risks serious harm to both consumers and wider system. Perhaps also no surprise, then, that a week later the FCA announced that its executive director for consumers and competition Sheldon Mills will lead a review into how AI will reshape retail financial services, submissions to which can be made until 24 February.

The FCA has also launched a further consultation on its value for money proposals requiring pension schemes to publish data on their performance, costs and quality of service, the deadline for responses being 8 March.

The Treasury Committee itself is this month continuing its inquiry into the Government’s financial inclusion strategy and is also holding a session with the Payment Systems Regulator ahead of its abolition and incorporation into the Financial Conduct Authority.

In the House of Lords the Financial Services Regulation Committee has launched an inquiry into the growth and proposed regulation of stablecoins, including the extent to which they could disrupt the financial services sector. The call for evidence closes on 11 March.

Lots going on then and no sign that the pace of change will slow down any time soon!