Think tank reveals cost of Labour’s U-turns second only to Liz Truss’ mini-budget chaos

A new report from think tank the Resolution Foundation has assessed the UK’s growth after 18 months of Labour government under Starmer, and in light of the economy’s progress after the pandemic. Unsurprisingly, the findings are looking underwhelming at best.

The UK’s per capita Gross Domestic Product (GDP) has barely increased since the pandemic. And, in a damning blow to Labour, the Resolution Foundation also laid a £8.2bn running-total at the feet of Starmer’s string of U-turns.

Reverse growth under Starmer

The Resolution Foundation titled its report ‘Mountain Climbing’. It evaluated the government’s progress towards improving living standards and economic growth.

As things stand, the UK’s GDP has only reached 0.8% above its highest level before the pandemic. To put it another way, the economy has grown in the last 6 years what it would normally grow in just 7 months. Inevitably, Covid-19 paused any growth that could have been expected over those long few years.

Productivity remained virtually flat between the last quarter of 2019 and the beginning of 2024. Since then, it’s shown a marked-but-steady increase of 3.4%. That’s the fastest the economy has grown since the last financial crisis.

However, Resolution Foundation gave a pretty major caveat for that growth in GDP:

we have not seen any improvement in creation of jobs or firms. This leaves the UK with an emerging unemployment problem, with the 5.1 per cent rate the highest for a decade (outside of the pandemic). The fall in employment means that growth in GDP per person has accelerated more slowly – to 0.9 per cent in the four quarters to Q3 2025.

Likewise, Labour’s increases in public spending also came with a caveat — our tax money is increasingly being used to inflate military budgets:

Although total public investment is higher than under the previous Governments plans, a rising share is accounted for by defence spending, leaving capital investment in pro-growth transport and R&D flat or falling as a share of GDP across the Parliament.

‘Bolder action’

Along with that, the report also blamed “Brexit-related trade frictions”, inadequate business investment and uncertainty around government policy for the UK’s slow start in rebuilding the post-pandemic economy.

Labour’s growth framework centers on economic reform, increasing investment and restoring stability. Whilst the think tank deemed this “sensible on paper”, it’s been rather haphazard in its delivery, stating that:

Important progress has been made with new fiscal rules, planning reform and public investment, yet delivery has often been too cautious given the scale of the challenge.

In stark contrast to this noncommittal approach, the Resolution Foundation is calling for “bolder action” in three areas with the greatest growth payout. Those sectors are housing supply, trade policy, and labour-market participation.

It also warned that without faster progress in those sectors, the country could remain mired in a state of low-growth equilibrium.

Likewise, the think tank also called into question Labour’s commitment to restoring stability into question. In particular, it highlighted the government’s frequent — and well-publicised — policy reversals:

substantial policy U-turns between the Spring Statement and the Budget in 2025 were the second largest in the
past 13 years, exceeded only (but substantially) by the reversal of measures announced in the aftermath of the mini-budget. The act of reversing policy creates uncertainty, but this is compounded by the subsequent need to identify alternative measures to fill the gap left by abandoned fiscal savings. [ED: PAGE 31]

£8.2bn in U-Turn uncertainty

For Labour’s current government, Resolution Foundation totted up policy reversals on three major U-turns. These were Personal Independence Payment cuts, the Universal Credit health element, and winter fuel payments. As the Independent pointed out in its reporting:

The research does not include the government’s most recent U-turns on business rates for pubs and inheritance tax rules for farmers, which are expected to cost another £300 million and £130 million respectively.

Predictably, GB News managed to misunderstand the figures creatively enough to state:

Labour U-turns have cost Britain an astonishing £8.2billion, a new report has found.

Now, this isn’t quite true.

Rather, the £8.2bn figure was based on the total final-year costs and peak impact costs for the U-turns, as given by the Office for Budget Responsibility. For obvious reasons, it can’t account for potential savings or costs should the policies have gone ahead as proposed.

As such, the £8.2bn isn’t a direct cost to the taxpayer. Rather, Resolution Foundation argued that government U-turns create economic uncertainty. Such policy reversal make for a stagnant economy as investors and consumers become increasingly uncertain about what’s around the corner.

As such, Resolution Foundation’s reveal that Labour is already guilty of the second-greatest value of reversals since Liz Truss’ epic mini-budget collapse will come as a major blow to the party’s desired image as deliverers of certainty and stability.

And, with the opposition hammering Starmer for his laundry list of U-turns, that’s a blow that Labour can ill-afford at this particular moment.

Featured image via the Canary