COULD a future prime minister Keir Starmer and chancellor Rachel Reeves follow the disastrous example of Ramsay MacDonald in the crisis of 1931 and go into coalition with the Conservatives?

It sounds unthinkable now, but if Labour does not win a big majority in the next election, and faces ongoing financial difficulties caused by global economic headwinds, a Labour government could be under pressure to cut spending. A minority of MPs from the left of the party could well oppose such moves to assuage the financial markets and vote against them.

Starmer has tried to control the selection of MPs to weed out anyone who would potentially oppose him in office, but that still leaves a number of Labour MPs who could vote against further austerity measures in future.

This would present Starmer with a difficult choice.

He could suspend the rebel MPs, but if he didn’t have the votes, he would need to rely on the Conservatives to get the cuts through. He could resign and call another election, or even form a new coalition with elements from the Conservative Party.

This last option is not so far-fetched: he has previously opened the door to Conservative MPs joining the party and has called his version of Labour the “real conservatives.” Starmer and Reeves have already embraced financial orthodoxy and committed to continuing Tory austerity policies that hurt the poorest families.

If the economic situation were to worsen after a general election, it is not impossible that their obedience to financial orthodoxy could see them back further cuts to spending. This is what led to the fall of the second Labour government in 1931.

As Julian Glover wrote in the Guardian in 2005: “In August 1931 Britain’s second Labour government collapsed under the weight of its own self-doubt. Unconvinced by either their own record in office or their ability to steer Britain out of accelerating economic decline, Labour’s two leading ministers... agreed to join a Conservative-led coalition, known as the National Government, that split the Labour Party.”

In the 1929 general election, the Labour Party won the most seats but needed support from other parties to govern. Ramsay MacDonald became Prime Minister but had to depend on the Liberals to pass legislation.

MacDonald’s attempts to work with the Liberals caused problems between him and Labour’s left MPs.

The 1931 budget crisis was caused by the great depression, with pressure from the financial markets on the Labour government to cut spending.

Chancellor Phillip Snowden could have introduced tariffs on goods coming into the country to raise revenue and protect British industry from competition. But the fear was that this could create a tit-for-tat protection war, making it harder for British industries to export.

The other proposal was a 20 per cent cut in unemployment benefits — at a time when unemployment had doubled and millions were out of work. This was seen as a frontal attack on the very people Labour were elected to defend and protect: workers and their families. The Cabinet was split and in August 1931 MacDonald resigned as prime minister.

On August 24 the King asked MacDonald to form a National Government with ministers from the Liberal and Conservative parties. The majority of the Labour Party refused to back the National Government and expelled the few MPs who supported it.

Snowden turned his fury against his Labour colleagues who refused to join the National Government, accusing them of “Bolshevism run mad.”

Such an outcome with most current Labour MPs — and the batch of new careerists that might be expected to enter parliament following Starmer’s selection stitch-ups — would be hard to imagine, but calling left-wing rebels die-hard Corbynites would be a Daily Mail headline in waiting.

The National Government won a landslide victory in the October 1931 election, but MacDonald became a hate figure for the unions and the Labour Party for bringing in severe spending cuts and forming a coalition with the Tories. MacDonald was expelled from the party.

The Conservative leaders, Stanley Baldwin and Neville Chamberlain, effectively took control of domestic policy leaving MacDonald to lead on foreign affairs.

MacDonald never recovered from his terrible political choices that led Labour to its worst-ever electoral defeat in 1931.

He resigned in June 1935 due to ill health, and a year later suffered a total mental and physical collapse. His daughter Sheila took him away for an ocean cruise on November 4 1937 and he died at sea five days later of heart failure, aged 71.

It was a bitter and disappointing end to a long career as Labour’s first prime minister.

The 1931 crisis is a warning to today’s Labour leadership that attempting to be more orthodox on public spending than the Tories is a dead end that will lead to political disaster and ignominy.