Sir Keir Starmer has been prime minister for less than three months, yet Labour begins its annual conference this weekend already weighed down by incumbency. Rows over gifts from wealthy donors and tickets to football games as well as squabbling about his chief of staff’s pay are feeding into public disquiet. These come when the burden of government in difficult economic circumstances and in an age of low public trust would have shortened any political honeymoon period. But Downing Street also set out with the explicit objective of dampening expectations of how soon change might come. That mission has been accomplished with a needless surplus of gloom.

Sir Keir’s urgent task in Liverpool is to recalibrate the mood with a sense of optimism and purpose. He needs to give the country reasons to be glad of a Labour government in ways that go beyond relief at no longer being ruled by Tories. New governments often come to power blaming the last. Sir Keir has given the nation an unvarnished account of the dismal legacy he has inherited. That bleak audit covers a record of political and financial maladministration.

Conservative ministers, driven by ideological fanaticism and self-serving cynicism, squandered energy and resources on ill-conceived, unworkable policies, while starving public services of vital resources. Sir Keir has a difficult job because the country is in a terrible state. Putting things right will take time. But that morose message has been soured by a performance of fiscal discipline, delivered without a hint of uplifting accompaniment.

The prime minister says things will get worse before they get better. The chancellor, citing “black holes” in the budget, withdraws winter fuel payments for all but the poorest pensioners and pledges more pain to come. Rachel Reeves’ argument is that government departments would outspend budgets by £22bn more than previously disclosed and that cuts were needed to compensate. This is a self-imposed restriction that stems from ill-advised fiscal rules. The force of that constraint, and the zeal with which it is applied as austerity across Whitehall, is also a matter of political choice.

Downing Street strategists argue that adherence to Tory spending limits was a non-negotiable condition of persuading the public that Labour could be trusted on the economy. Maybe so, maybe not. There is no way to test the counterfactual scenario, where Ms Reeves fought the election with a wider range of tax-raising options still open. However, the decision to lean into unpopularity so hard, so fast and without a countervailing narrative of hope looks like poor strategic judgment.

Labour’s election manifesto contained plenty of reasons to expect a substantial departure from a grim status quo. A marked progressive shift was promised in the areas of workers’ rights, a robust commitment to net zero, improved relations with the rest of Europe and, perhaps most significantly, readiness to embrace a more interventionist model of economic management, including public ownership of utilities.

The Starmerite script contains rather too much fiscal conservatism, but the hope is that there is a social democratic framework at its core. It expresses the opposite of the Tory conviction that government’s main function is to facilitate market supremacy and then get out of the way. Many of the activists and MPs gathering in Liverpool feel unsure which of the two strands – cringing continuity or bold departure – will dominate. Sir Keir’s task is to answer in terms that give hope of meaningful change to come.

BBC

New leader

Keir Starmer and his top team will no longer accept free gifts of clothes from Labour donors, as it emerged that Rachel Reeves and Angela Rayner also received donations for work outfits.

After the row over the Labour peer Waheed Alli funding Starmer’s work wardrobe, the prime minister is understood to have decided he will not take donations to pay for clothes in future.

Lord Alli had given him £2,435 worth of glasses and £16,200 worth of work clothing, as well as a stay in a £18m penthouse luxury apartment. Starmer may have broken parliamentary rules in failing to declare clothes bought for his wife by Alli within 28 days of receiving them.

The Guardian can also reveal that Rayner, the deputy prime minister, was given a donation for work clothing from Alli in June. This was declared as a donation in kind from the peer worth £3,550, without saying it was for outfits. She is understood to have contacted the registrar of interests to give a fuller description of the donation.

Reeves has accepted a donation of £7,500 from a donor, Juliet Rosenfeld, since the beginning of last year, which was used to pay for clothing, but it did not amount to a donation in kind.

It is understand that Rayner and Reeves have also decided not to take any future donations of this kind for clothing.

The row over donations from Alli has caused a headache for Starmer after he pledged to run a government of high standards.

The prime minister had taken a defiant line in insisting he had complied with all rules over the declaration of more than £100,000 in free tickets, mostly to football matches, and gifts from Alli.

His decision to no longer accept free clothes comes after pressure on him from several Labour figures.

John McDonnell, the former Labour shadow chancellor, said on Friday that early Labour leaders would have been surprised to see Starmer being “expensively clothed by rich sponsors”.

McDonnell, who had the whip suspended for refusing to vote to cut winter fuel payment, said that when Keir Hardie was elected as the first Labour MP, he went to parliament in his working man’s tweed suit.

He said Hardie was not “expensively clothed by rich sponsors because as a matter of principle he refused to ape the Tories and Liberals in their expensive frock coats and silk top hats”.

“The early leaders of the Labour party must be spinning in their graves at the behaviour of some holding positions in the leading echelons of the Labour party today,” McDonnell added.

Writing for the Guardian, McDonnell also hit out at the “poor political judgment and the failure to control the self-serving arrogance of the heavies that now control much of the party machine, including the leader’s office”.

McDonnell, who served under Jeremy Corbyn’s leadership, said previous Labour leaders would have turned their minds to implementing socialist policies rather than bickering over their own pay.

Harriet Harman, the former interim Labour leader, had also suggested Starmer should admit accepting the freebies was a mistake instead of trying to justify it.

The Labour veteran told a Sky News podcast: “You can either double down on it and try and justify it or you can just say it was probably a misstep, if I had my time again I wouldn’t do it and therefore I’m going to auction for charity or something.”

Diane Abbott, the former shadow home secretary, who had the Labour whip returned earlier this year, said on Friday: “I don’t always agree with Harriet Harman but she is right on this.”

Meanwhile, Stephen Flynn, the SNP Westminster Leader, said Starmer had shown “shockingly bad judgment” by taking more than £100,000 of freebies while “imposing austerity cuts on the rest of us”.

The furore over the freebies has added to tensions in Labour, which was also struck by a row about a salary of £170,000 given to Starmer’s chief of staff, Sue Gray. Junior advisers have been furious that she is being paid more than the prime minister when their salaries have been cut.

Starmer has defended Gray and also sought to downplay his freebies, saying everything has been declared in line with the rules of parliament.

Overall, Starmer has accepted more than £100,000 in free tickets to football matches, concerts and gifts – more than any other MP in the last parliament, and any other major party leader.

The prime minister has been facing questions over the potential conflict of interest created by accepting so many free tickets from Premier League clubs when the industry is lobbying against his plans for a football regulator.

One person involved in the formation of the regulator said there had been a huge amount of attempted lobbying by football clubs towards politicians and officials as they sought to water down the regulation.

Nigel Farage has said “bigots” and “extremists” are not welcome in Reform UK, as he seeks to “professionalise” the party after its election success.

Addressing its annual conference in Birmingham, the Reform UK leader said the party was “coming of age” after winning its first MPs in July.

But he conceded the party had not been “professional enough” to properly vet candidates, following a series of controversies over their past comments.

He added that the party represented the “silent majority” and could have won more seats, but that “amateurism let us down”.

Among proposed changes to make the party more professional, he said the party would be vetting candidates “rigorously” for all future elections.

He added that they would also seek to emulate the Liberal Democrats by aiming to win more seats on local councils to bolster its national electoral chances.

The Merlin helicopter sitting on a factory floor in Yeovil is a familiar sight to James Bond aficionados: it featured in the climactic shootout of the 2012 film, Skyfall.

Workers at the Somerset factory are upgrading the aircraft for the Canadian air force, a lucrative source of income for its owner, Italian state-backed weapons maker Leonardo.

But Leonardo has its eyes on a bigger prize for Yeovil: after a drawn-out process, it has emerged as the single bidder for a £1bn contract to build new medium-sized helicopters to replace the Pumas used for decades by the Royal Air Force in conflicts around the world.

Yet with Labour in the UK carrying out a strategic defence review, some in the industry believe the helicopter purchase could be scrapped altogether by a government that has stressed the gloomy state of the public finances.

What happens next matters hugely for Britain’s last remaining helicopter factory, the Somerset market town of Yeovil, and Britain’s wider defence industry. In a local population of about 50,000 people – with several areas in the 20% most deprived wards in England – Leonardo employs 3,300, many of them at higher pay than the surrounding area.

The town’s history is inseparable from the factory. The first aircraft, a seaplane, left the Westland aircraft works on 1 January 1916 on a horse and cart, according to Leonardo. During the second world war the site – which still retains some overgrown pillboxes – made the Seafire, the marine version of the famous Spitfire, before switching to helicopters. Westland became a household name in the 1980s when a row over its future nearly brought down the government of Margaret Thatcher.

Leonardo insists the MoD purchase is not at risk, despite rivals Airbus and Sikorsky quitting the competition last month. Clive Higgins, the chief executive of Leonardo’s UK arm, said that “we absolutely need a medium-lift platform” and that he was confident that the company can meet specifications that rivals thought were too testing.

Leonardo, like the defence industry as a whole, has benefited from the huge rise in military spending prompted by Russia’s full-scale invasion of Ukraine. The Italian company’s share price has more than tripled since the start of 2022, valuing it at more than €12bn (£10bn).

The invasion, other conflicts such as the Middle East crisis, and the perceived threat of Chinese aggression have contributed towards a consensus among Nato allies that more military spending is required. Labour under Keir Starmer and defence secretary John Healey are on board.

Previous Labour leader Jeremy Corbyn was deeply sceptical of the weapons industry, and Leonardo’s Edinburgh operation has been targeted by protesters alleging it supplies parts for the F35 fighter jets used by Israel in Gaza. (Leonardo said it is subject to UK government export controls and does not supply equipment direct to Israel.) But Starmer’s Labour wants to use weapons purchases to support UK manufacturing jobs – deepening a policy introduced by the previous Conservative government.

That should be good news for jobs at Yeovil. Leonardo was always in a good position to win the contract against rival bids from European aerospace champion Airbus and America’s Sikorsky, owned by Lockheed Martin. Airbus had pledged to invest in an assembly line in Broughton, north Wales, and Sikorsky in Gosport, Hampshire.

However, the new medium helicopter competition has turned into a headache after Airbus and Sikorsky pulled out of the running on the day that bids were supposed to be sent in. Both companies said they did not believe it was possible to deliver the programme at the cost envisaged.

Leonardo is putting forward the AW149, capable of carrying 19 troops, which is currently made in Italy, albeit using some parts and designs made in Yeovil. Leonardo has already started to install equipment for a new UK line, ready to produce the new helicopters within two years.

That would add to the existing vast hangar where new aircraft are assembled – mostly by hand – to satisfy exacting military customers. Merlin and Wildcat choppers for Brazil, Portugal and Norway were among those dismantled to varying degrees when the Guardian visited the factory which sits in an 89-hectare (220-acre) site.

Adam Clarke, the managing director of Leonardo Helicopters UK, repeatedly touted the factory’s “end-to-end capability” of the UK’s only helicopter factory. The sprawling site’s responsibilities range from making helicopter blades – stacked in racks in a new warehouse – and gearboxes to certifying airworthiness and training pilots in simulators.

“You can’t simply say ‘I’m going to take an aircraft that has never been built and stick it in a factory that’s never done it’,” said Higgins – a swipe at “pop-up factory” rivals that had planned to assemble helicopters from foreign-made parts.

“You could well get that level of service from another international partner,” he said, “but would you be at the front of the queue against all of the other international customers and their indigenous domestic market? You might not be.”

After passing through various owners, Italy’s Finmeccanica took over Westland in 2004 before changing its name to the Renaissance inventor (and would-be helicopter designer) Leonardo da Vinci.

Leonardo’s UK operations made profits of £188m in 2023 on turnover of £2.3bn. £830m of those sales came from helicopters. But another key source of business is work on radios and sensors on the joint Tempest programme between the UK, Italy and Japan to produce a new fighter jet by 2035.

Tempest will be a vital part of the Labour review, but Higgins indicated that there is little doubt over its future.

“There’s activity taking place so rapidly on this,” he said. “I think government are very keen to make sure it’s moving forward and we’ll see other updates in the next few weeks I’m sure.”

But on the helicopter contract, Yeovil may have to wait. The Labour review is due to report in the spring.

Helicopters – like other expensive military kit – often get overhauled, with replacements to engines or electronics stretching the life of the “same” aircraft out for decades. Airbus last overhauled the Puma in 2011 with new engines and cockpits, and Bruno Even, the chief executive of Airbus Helicopters, claimed it could operate until 2035.

By that point “vertical lift” may have changed. Nato is working on the next-generation rotorcraft capability (NGRC) project which could result in more “tilt-rotor” craft such as Boeing’s V-22 Osprey, which can fly faster horizontally and vertically, while a European effort involves Airbus and Leonardo. Airbus is focusing on a design that puts extra backwards-facing rotors on a helicopter so it can go faster.

Meanwhile, the rise of drones in civilian life and warfare and electric passenger rotorcraft could add more challenges to the helicopter industry.

Making do with the Pumas could prove an attractive prospect to politicians looking for savings. Leonardo has already bet heavily on tilt-rotor craft, but Clarke said the hope to translate “paperwork exercises” into working machines by 2035 is “very very sporty”.

“I think it will be very expensive,” he said. “If you’re speaking from a taxpayer’s perspective, I don’t know that that’s the best use of money.”

In the meantime, Leonardo is hoping the UK government will be swayed by the economic benefits to Yeovil.

“The value proposition that comes from Yeovil to UK plc is significant,” said Higgins. “If you take something like [the] new medium [helicopter] alone, we know there’s a market internationally for 500-550 platforms. Why wouldn’t UK government want to benefit of that activity taking place here in the UK?”