Since Labour’s triumphant return to power barely a year ago, the party in government has floundered amid a struggling economy, a lack of political vision, and an inability to pass difficult reforms. Unfortunately for Keir Starmer, the situation could yet deteriorate much further. Just look at the implosion of the Labour government in 1931.
Like the Starmer government almost a century later, Labour won the 1929 election on a relatively weak share of the vote. Former prime minister Ramsay MacDonald won 287 seats and just 37.1 per cent of the vote. Last July, Keir Starmer won 33.7 per cent of the vote.
Much like 2024, the 1929 election also occurred when the two-party system was, at least by 20th century standards, unusually weak. Although Labour had just replaced the Liberal party as the dominant force on the left, the Liberals – armed with the more radical manifesto and considerable financial backing – made their last serious bid for power. When they were rewarded with almost a quarter of the national vote, MacDonald was forced to form a minority government with Liberal support.
However, despite initial optimism at home and some success in foreign affairs, the new Labour government quickly ran into problems. As Matthew Worley, the historian of the interwar Labour party, has written, the new government soon appeared ‘out of its depth’, having taken power ‘with a number of objectives but with little to no idea of how to achieve them’.
The reforms it did enact were hardly groundbreaking. For example, MacDonald’s government extended eligibility for widows’ pensions to those who had been excluded from earlier legislation, tweaked eligibility rules for unemployment assistance, and enacted slum clearance legislation that replaced fewer than 20,000 homes in its first three years.
Yet, at the core of the MacDonald government’s problems was an inability to deal with a deteriorating economic situation, which made it extremely difficult to reconcile the competing demands of fiscal orthodoxy and a restive base.
Elected just months before the onset of the Great Depression, the government was buffeted by the economic and political costs of rising unemployment. From less than 1.2 million in June 1929, the number of jobless increased to 2.5 million in December 1930 and almost 2.9 million by September 1931.
Echoing fiscal challenges today, the Exchequer came under increasing strain, with the cost of unemployment insurance ballooning from £11.8 million in 1928 to £37 million just two years later. Lacking any clear strategy to deal with the crisis, the government instead hid behind a succession of inquiries and fruitless cross-party talks.
The price of the MacDonald government’s failure was immense
Ultimately, the tensions between financial market pressures and internal opposition to cuts brought about the MacDonald government’s collapse in 1931. When unease at the UK’s debt position triggered a currency crisis, MacDonald and his chancellor, Philip Snowden, failed to persuade the Cabinet, and most of the Labour party, to support the spending cuts that mainstream economic opinion believed necessary to reassure financial markets. Unable to chart a path forward, the government collapsed and Labour itself split, with MacDonald, at King George V’s request, staying on as prime minister at the head of a Conservative-dominated National Government.
The price of the MacDonald government’s failure was immense. The ensuing general election, held in October that year, was total disaster for Labour, which was reduced to just 52 seats, a loss of 235 seats. Even the various Liberal factions – the party had since split into three groups – between them had 20 more seats than the shattered official opposition. Labour was defeated again at the 1935 general election, and remained locked out of power until the wartime Churchill coalition Government was formed in 1940.
There are a few major differences between the 1929-31 MacDonald Labour government and the majority Labour government of today. For one, MacDonald headed a minority government, whereas Starmer currently enjoys a working Commons majority of 148 seats. Second, there is also no sign yet of an imminent 1931-style market panic. Still, early days.
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