Treasury-driven decisions and narrative ‘vacuum’ has ‘killed’ Labour government, Alistair Carmichael says

The Labour government has “blown” the “generational opportunity” it was given at last year’s election, veteran Lib Dem MP Alistair Carmichael has said.

Carmichael, a former Scottish secretary, said the “lack of a political filter” in the current UK Government is a “weakness”.

And he suggested decision-making being led by the Treasury means there is no “narrative” around reforms being put forward.

Speaking exclusively to Holyrood, he said Prime Minister Keir Starmer had left a “political vacuum” between the election last summer up until the budget at the end of October, which has “killed them”.

He said: “I see the weakness being actually in Downing Street, because it strikes me… that you’ve got the Treasury calling the shots on just about everything. Treasury ministers have, to quote one of my Labour friends, drunk the Kool-Aid. And there is not that counter-balancing political operation in Downing Street, which is what you need. So, yes, the Treasury should be strong on the numbers, but Downing Street should be strong on the politics of it.”

Carmichael also compared the current row over planned changes to disability benefits to the welfare reforms pushed through by the Conservative-Lib Dem coalition government in the early 2010s, during which time he was deputy government chief whip.

He said that back then the decision to make changes was seen as “opportunities to reduce public expenditure”.

On the introduction of Universal Credit, he added: “It’s been undermined by the fact that it’s not been properly resourced. But as a principle, it was a much better system. And you were able to construct a narrative that said, these are changes for a purpose.

“Where is that narrative now? Universal Credit was phased in over a long period of time… The difference now is it looks like you’ve got the spending cuts in welfare without the political purpose attached.

“It’s back to this idea that the decisions are all made in the Treasury without the political counterbalance coming from Number 10 or an ability to communicate.”

He suggested the consequences of this will be felt “most immediately in Scotland” given the Scottish Parliament election next year.

Asked to give a prediction for the result of that election, the MP said it could create an “absolute bonfire” of a parliament.

He suggested the woes and entrenchments of the SNP, Labour and Conservatives, on top of the growth of Reform, could make it difficult to build bridges.

“I honestly don’t know how you construct a stable government out of all of that,” he said.