Starmer and Reeves are playing a dangerous game. How much more do they think Britain can take? | John Harris

As the nights begin to draw in, the brief euphoria of 5 July increasingly feels like something that happened in a lost time of sunny innocence. Today, amid deep dismay, the House of Commons approved the government’s ill-conceived and dangerous plan to withdraw the winter fuel allowance from most pensioners in England and Wales.

Rachel Reeves has reportedly given ministers and civil servants until Friday to draw up departmental savings. In some parts of Keir Starmer’s administration, meanwhile, minds are at least partly focused on interesting and exciting policies – but the Treasury is spreading a familiar sense of fear and foreboding.

What this highlights is simple enough: that there are two strands of this government. One is recognisably left-of-centre, and is personified by a handful of key cabinet ministers: Angela Rayner, Ed Miliband, the culture secretary, Lisa Nandy, and Louise Haigh, who is in charge of the transport brief.

This grouping’s priorities are manifested in such policies as improving people’s rights at work , creating a new, publicly owned energy company and gradually renationalising the railways and reregulating local buses in England: all well-intentioned and avowedly social-democratic proposals that serve as instant reminders that the Tories are no longer in charge.

The other key Labour tendency, however, has a rather different mindset – and given that its representatives include the prime minister and the chancellor, it is much more powerful. In their own way, Reeves and Starmer are as stereotypically Labour as their more left-leaning colleagues, but they are statist technocrats rather than merchants of social change: their shared quest, it seems, is to put the government machine back in working order and cling on to its orthodoxies in the hope that they can be restored, while somehow sparking renewed economic growth.

This is really a bureaucrat’s prospectus, all about such apolitical concepts as competence and efficiency. It reflects Starmer’s time as the director of public prosecutions, and Reeves’s spell at the Bank of England. And its most vivid illustration is the three-pronged insistence that will define the immediate political future: that supposed fiscal rectitude must prevail, that no really ambitious thinking can be brought to the tax system and, as a consequence, that meaningfully lifting the country out of the hole it has been stuck in for 14 years is going to have to wait. Treasury spreadsheets, it seems, have decided our fate – and the national malaise may be about to deepen even further.

The way the government explains this counsel of despair is often quite something. Last month, Starmer baldly served notice that, though he ran for office on the promise of change, “things will get worse before we get better”. He has since made a habit of drawing increasingly strange analogies with home improvement, and talking about the need to “ fix the rot ”.

So far, that seems to entail not just leaving pensioners to freeze, but cutting back on such policies as encouraging nature-friendly farming, while scrapping the last government’s planned social care cap, which would have limited the costs of care to people in England to £86,000. Where is the “rot” in any of those things?

Last weekend, the Financial Times reported on a “Whitehall revolt” in response to Reeves’s demand that government departments will have to stick to the stringent spending constraints she inherited from the Tories, and cited civil servants’ claims that “the cuts that the Treasury wants are just not possible”.

The Institute for Fiscal Studies, moreover, has already pointed out that protecting such areas of spending as the courts, prisons and further education from more decay – which is to say, still leaving them largely bumping along the bottom – means raising spending by up to £20bn a year by 2028-29. This is the price of the pretty awful status quo: the bill for any improvement, clearly, will be even greater.

One particular part of the state highlights the potentially catastrophic nature of what the government seems to want to stick to. The public-services union, Unison, has found another of those fabled “black holes”: a gap of £4.3bn in next year’s projections for the services provided by local councils in England, Wales and Scotland. Without urgent – and extra – government support, the union warns: “The combined funding shortfall could balloon to £8.5bn by 2026-27, leaving many councils struggling to provide essential local services and protect jobs.”

That points to even more local authorities going bankrupt – and even if many manage to avoid that, it could mean more cuts to social care, special needs education (whose dedicated deficit is expected to reach £5bn by 2026), libraries, leisure centres and all the other services that councils provide.

Among all the numbers, there is a huge story here about the everyday reality of people’s lives. What I would call ambient austerity – litter everywhere, overgrown grass verges, potholed roads, rusty slides and swings – is now deeply ingrained. It sits at the heart of the cynicism towards politics and politicians that is intensified by social media. It has also been a sizeable part of most of the political ruptures of the past 14 years, not least Brexit – and, at the election, the way that Reform UK seized on so many resentments in traditional Labour heartlands that it often finished second .

Leaving pinched and angry places largely unchanged, in other words, would be insanely dangerous for Labour. But there is also a moral point to be made, about how much politicians expect people to put up with. Britons are knackered and despondent, for very obvious reasons bound up with a phase of history that began with the financial crash of 2008 and everything it triggered, only to lead on to the convulsions of Brexit, the pandemic and a cost of living crisis that millions are still coping with.

The new government, unfortunately, is sending out some very rum signals indeed. As evidenced by the fact that £9.4bn of Reeves’s £22bn “black hole” is accounted for by public-sector pay increases, if people can make a lot of noise – and strike – they might get some of what they need. If they can’t, they may just have to grimly hang on.

I don’t know whether Unite leader Sharon Graham’s proposed wealth tax on the richest 1% would raise as much as she says – £25bn a year – but it is surely worth trying. It also seems that some government borrowing to repair our social fabric might be not just eminently possible, but essential to the government’s “mission” of growing the economy.

It would also be very welcome to see something so far completely lacking: ministers applying the energy and imagination swirling around some government departments to the most basic issues of taxation, spending and the public services they pay for. This country needs a lot more than the myopic parsimony of pen-pushers and bean-counters: if it doesn’t push beyond it, the future will not be about our national condition deteriorating before it improves, but something much, much worse.

• John Harris is a Guardian columnist