Budget, migration and a No10 shakeup: What's in Keir Starmer's in tray as MPs return to Parliament?

The Prime Minister will be forced to hit the reset button as he attempts to get on the front foot on year two in charge of the country.

And as a new poll by Merlin Strategies, for 5654 & Company shows today, he has a big mountain to climb, as the public are far from happy.

Two in three people think Britain is broken, and needs radical action to fix.

Most think the cost of living crisis is the top concern, as Rachel Reeves gears up for another potentially unpopular budget.

MPs I've been speaking to over the summer have been growing more desperate to see more ideas, radicalism, and creative thinking to get to grips with some of these issues.

This morning the Prime Minister's announced some big changes of his top team to kick off the year.

Chief Secretary to the Treasury, Darren Jones, will move to No10 in a new role - to be the PM's Chief Secretary in Downing Street, working to drive forward progress in key policy areas.

And he's hired Baroness Shafik as his Chief Economic Advisor to support the Prime Minister on economic affairs - driving up living standards and focusing on growth.

James Lyons, one of the PM's Directors of Communication, will leave No10 after just a year in the role.

And No10 outlined what will be their three main priorities going forward: growth people feel in their pockets, secure borders, and getting the NHS back on its feet.

Those are three priorities which, if delivered upon, can help Labour to win another term in office.

So what issues will be top of the agenda?

Growth and the economy... ahead of a tricky Budget

Balancing the books without hitting working people in the pocket is going to be the defining moment this year for the government.

The Budget, with the date to be revealed later this week, will be a make or break moment for the PM.

And today's poll reveals the cost of living is still the overwhelming priority for 66 per cent of British voters, despite migration creeping up the political agenda.

That’s followed by the economy (46%), healthcare (45%), immigration (44%), and housing (18%).

Nearly four in ten voters earning more than £80,000 of more said the cost of living was the country’s main challenge.

Over a third of all people said their situation was "getting by, but it's tight," while 31% say they are "comfortable but not wealthy."

So, what to do to ease that crisis, while also balancing the books?

Brits are split on taxes, with voters divided on whether the government should raise taxes to increase spending or maintain current levels.

However, there is broad consensus that income taxes are too high, with 51% of the public saying they are, and only 14% saying they are too low.

Concerns are higher for taxes on working people, with nearly two-thirds (62%) saying these are excessive. Any attempt to raise too much money here will backfire.

The Chancellor’s rumoured to be looking at a string of policies to try and fill a black hole that some economists say is up to £40billion.

Options on the cards include putting National Insurance on rental income, closing loopholes around inheritance tax, or changes to capital gains and property taxes.

I'm told the Treasury will focus more on "fairness" and making the tax system more equal. This could be a sensible approach, if it's delivered in the right way.

But whatever happens, the Treasury will face an uphill battle not to spook the markets, break their own fiscal rules, and keep everyone happy.

Someone's going to have to lose out.

Small boats and migration

The summer has been dominated by small boats crossings as they appear to be heading towards more record numbers - and more than 50,000 crossings since Labour came to power.

However, August figures from the Home Office will be vindication for the government's smash the gangs approach.

They say that August numbers of boats and people crossings are down.

The 3,567 arrivals in August 2025 compares to 4,149 last August, 5,369 in August 2023, and 8,631 in August 2022, according to the Home Office.

But plans to shut asylum hotels as promised, and move 30,000 people out of them by the end of the parliament, will also put continued pressure on the government.

Continuing to put asylum seekers in hotels in the middle of communities, alongside the overturning of the Epping hotel judgement, will anger locals.

Yvette Cooper will have to show continued progress on those numbers in order for Labour to be seen to be having a better year two, than year one, without being seen to "pander" to the Reform party by being too hardline.

Recognising Palestine

Despite some kickback from Israeli hostage families and international governments including America, Sir Keir Starmer will push ahead with plans to recognise the state of Palestine at the UN General Assembly in New York.

Alongside other allies like France, he'll attempt to use it to move the dial in the Middle East.

And many Labour insiders hope it will nip in the bud the fledgling support for Jeremy Corbyn and Zarah Sultana's new outlet too.

But that'll face blowback from Reform, the Tories, and Israel.

And many on the left of Labour will only urge him to go further and faster to put pressure on Israel.

You'll remember the interview Sir Keir Starmer gave to LBC the year before the election, where he messily appeared to suggest that it was within Israel's right to cut off water to Gaza.

He'll need to be much more careful with his language this year to avoid any hot water on either side.

Fixing the NHS

As per No10's new priority list, the NHS will be a key part of Labour's second year in office.

They've succeeded in driving down waiting lists a little, and dishing out more appointments, but there's still a long way to go.

And ministers are worried about the possibility of more strikes by junior doctors undoing their hard work - or whether that action might spread to other parts of the NHS.

The reform that Wes Streeting promised hasn't properly begun yet in earnest, and is likely to get a lot of push back from the sector when it's finally rolled out.

That's not to mention the ever-growing elephant in the room - social care.

But, as ever, the future of the health service and driving down those waiting lists even further, hangs in the balance.

President Trump's state visit

Before the rough and tumble of party conference, the Prime Minister has one important hurdle to navigate first - the state visit of President Trump.

Arguably, this relationship has been one of the PM's strengths during his time at No10.

He used a letter from the King as a secret weapon to disarm Trump with during his visit to the Oval office back in February.

The NATO summit caused some headlines, but the President largely kept on message, and left the alliance with the continued support of their biggest donor.

The PM has been able to disagree with him over key issues of policy - like Palestine - without severing ties with the US regime.

A state visit, with the pomp, pageantry, and surely protests, that will come with it, will test that.

Sir Ed Davey's already made headlines by announcing he will boycott the state dinner over Gaza.

That's not to mention Trump's unpopualrity amongst the British public. He has to hug him close to get what he needs internationally, but the British public won't stomach too much of it.

Will Starmer the 'Trump whisperer' strike again, or will he risk being embarrassed on home soil?