A series of high-profile policy reversals by the Labour government has cost the UK economy an estimated £8.2 billion in lost growth, according to a major new report. The analysis from the Resolution Foundation think tank highlights how Sir Keir Starmer's administration has undermined its own economic strategy through a string of U-turns.
The High Price of Policy Reversals
The report, published on Monday 19 January 2026, states that while progress has been made on some of the government's economic aims, this has been severely hampered by Labour "running down its own plans". Despite a core pledge to restore stability, the research found that policy uncertainty is higher in this Parliament than in any of the previous seven, directly as a result of the numerous row-backs.
The think tank calculated that U-turns on personal independence payments, universal credit, winter fuel allowance, and the two-child benefit cap have collectively delivered an £8.2 billion hit to Britain's economic output. This staggering figure does not even include the most recent reversals on business rates for pubs and inheritance tax rules for farmers, which are expected to cost an additional £300 million and £130 million respectively.
A Pattern of Humiliating Reversals
Sir Keir Starmer's tenure has been marked by a consistent pattern of U-turns, with the total number since the general election standing at at least nine, and by some counts as many as 13. These include the watering down of the government's flagship benefits bill and a major reversal on the controversial winter fuel cut last year.
Just last week, ministers scrapped plans for a compulsory digital ID scheme for workers to prove their right to work in the UK. This followed closely on the heels of the decision to provide extra support for pubs facing steep business rate hikes. Furthermore, on the same day the report was released, the government pulled an amendment to its proposed Hillsborough Law amid concerns intelligence agencies could exploit it to avoid a duty of candour.
Undermining a Growth Strategy
The Resolution Foundation's research director, Greg Thwaites, offered a stark assessment. He noted that the chancellor has announced £6.1 billion worth of U-turns, a scale of fiscal reversal second only to Liz Truss's "mini-Budget" in the last fifteen years.
"There’s lots to welcome in the government’s economic growth strategy," Thwaites said. "But it has spent much of the past 18 months undermining that strategy with policy U-turns, kite-flying tax ideas and timidity in areas like trade where it needs to be bold."
He urged the government to capitalise on potential improvements in productivity by ramping up its plans. Key recommendations included redoubling efforts to unblock housebuilding in major cities, focusing job support for young and older workers, and making a decisive choice on whether to reverse some of the economic damage caused by Brexit.
