Starmer’s government hunkers down for ‘long-haul’ Iran conflict

LONDON — Days into the U.S. war with Iran, the U.K. government is retooling to cope with a crisis that is already squeezing British defense capabilities and driving up energy prices.

Teams of officials are being redeployed around Whitehall, including at the Ministry of Defence, Foreign, Commonwealth and Development Office (FCDO) and departments covering energy, transport and trade, in order to cope with fresh demands.

Two people working in the civil service, granted anonymity because they like others in this piece were not authorized to speak publicly, said reassignments had been made on a three-to-four-month basis. A third person said internal government assessments are not necessarily that specific — but that they expect to be dealing with the war on Iran and its fallout “for the long haul.” 

The government’s central assumption is that the direct, kinetic phase of the conflict will last weeks but its tail could be much longer.

While the U.K. is straining to keep out of the conflict — granting only limited use of its military bases to the U.S. — ministers accept there will be a huge knock-on effect from the Middle East crisis. That includes on hot-button cost-of-living issues that are central to embattled Prime Minister Keir Starmer’s chances of political survival.

Military response

The Ministry of Defence is focused on the immediate task of trying to protect U.K. military assets and personnel, while the government’s other top concerns were highlighted Wednesday by Chancellor Rachel Reeves’ audience with oil and gas sector representatives and Treasury Minister Lucy Rigby’s meeting with insurers.

“I don’t think anyone’s expecting this thing to be over quickly,” said one British diplomat. 

The U.K. has been preparing for potential U.S. strikes on Iran since the beginning of the year, according to four officials, including by surging fighter planes to the region.

The MoD moved to a higher level of force protection — measures designed to safeguard military personnel and facilities — in response to mass unrest in Iran and the U.S. bolstering its presence in the Gulf. 

Treasury Minister James Murray alluded publicly to these operations, telling Times Radio: “I’m not going to get into exactly the details of what happened. But what I’m clear about is the defensive capability that we’ve been building up in recent weeks.”

Nevertheless, two government officials said the eventual action by the U.S. and Israel was beyond what they had expected, as was Iran’s response — which they described as “haphazard.”

The U.K. had some foresight of the U.S. intention to move, said one of these officials, but they had far less indication of where Iranian retaliation would fall, which partly explained the apparent slowness of British warship HMS Dragon and helicopters going to the aid of the U.K.’s Royal Air Force base on Cyprus.

Jacob Parakilas, research leader at the RAND Europe think tank, said: “RAF Akrotiri was certainly a conceivable target in the event of hostilities but it’s neither the easiest nor the most significant target for Iran.”

A Western official said the decision to send the warship to the Mediterranean only landed on U.K. Chief of Defence Staff Rich Knighton’s desk at 9.30 a.m. on Tuesday, and was approved soon afterwards.

The MoD is one of the ministries which has redeployed staff internally to work on Iran, with high priority attached to ensuring that the U.K.’s changing posture does not damage existing NATO commitments or sap energy from efforts to support Ukraine.

Starmer has already sought to link the Middle East conflict to the war in Ukraine, saying Ukrainian experts will help shoot down Iranian drones, and his government is expected to call on industry to help meet the need for stronger air and missile defenses.

Parakilas predicted the conflict would not require a massive outlay of further British defense capabilities, since the U.K.’s naval base in Bahrain is heavily defended and can meet the threat of occasional attacks by Shahed-style drones. 

But, he warned: “That should not be cause for complacency.” In this instance, Parakilas said, the U.K. and most of its facilities are at the edge of Iran’s reach — “but that will not necessarily be the case in future conflicts.”

Terror risk

Elsewhere, the Home Office and security services are monitoring for a heightened risk of domestic threats.

On Monday the National Cyber Security Centre — part of the GCHQ digital intelligence agency — issued a fresh alert in response to the situation in the Middle East, calling on organizations to review their cybersecurity.

It noted that although it views there to be “no current significant change” in the direct cyber threat from Iran to the U.K. this may change due to the “fast-evolving nature of the conflict.”

The FCDO is meanwhile leading repatriation efforts described as “unprecedented,” by Foreign Secretary Yvette Cooper with hundreds of thousands of Britons currently stranded in the Gulf.

Above all, civil servants are scrambling to deal with potential implications for the energy sector and international trade — two areas that risk upending the unpopular Starmer government’s bid to slash the cost of living.

Households could see more than £500 added to their energy bills this summer if hostilities continue, the Resolution Foundation think tank calculated earlier this week.

Keir Starmer Starmer told MPs that “the question of energy supply right now is a serious one.” | Wiktor Szymanowicz/Future Publishing via Getty Images

Starmer told MPs at prime minister’s questions Wednesday that “the question of energy supply right now is a serious one” and “we are doing all we can, with allies, to make sure that it is preserved. It is vital that we keep trade flowing through the Strait of Hormuz.”

The U.K. is currently considering options for protecting commercial ships in the Strait of Hormuz, including sending naval escorts, according to Western officials. 

Energy Secretary Ed Miliband has held talks with representatives from Qatar and Saudi Arabia, as well as energy giants BP and Shell about global energy markets in recent days.

A third government official said the hope is that consumers are protected for a while because Britain’s energy price cap — a limit on the amount suppliers can charge for each unit of gas and electricity — is locked in for the next three months.

But they acknowledged there would be pressure to replicate several support schemes drawn up after Russia’s invasion of Ukraine, even as they cautioned that the need for such a move is a long way off.

Treasury Minister Lucy Rigby met insurance firm Lloyds of London Wednesday to discuss how the sector is being affected. A fourth Whitehall official said that while commercial insurance remains available, additional premiums may be needed for vessels transiting these areas.

A jump in energy prices could, in turn, hold back the Bank of England from continuing on its path to reducing interest rates, economists have warned – something that would represent a significant blow to Reeves and the government’s wider battle with inflation.

The National Institute of Economic and Social Research think tank has carried out analysis which finds that if the shock to energy prices is more than just temporary, the U.K.’s central bank may have to go in the other direction — raising the all-important Bank Rate from its current 3.75 percent rate to back above 4 percent.

“The Bank of England will have to contend with a shock to global energy prices, with the question of persistence hanging over their heads. This will cause problems for Rachel Reeves as financing costs increase, putting further pressure on an already precarious fiscal outlook,”  said the NIESR’s Ed Cornforth.

Mason Boycott-Owen and Charlie Cooper contributed reporting.