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July 30, 2024 - 7:00am
It was brutal, ferocious, personal — and effective. Looking out from the dispatch box yesterday afternoon, Rachel Reeves set about trying to dismantle not just the economic record of her opponent, Jeremy Hunt, but his character. The Shadow Chancellor looked shell-shocked.
If the Conservative Party’s reputation for economic management was already on life support, Reeves seemed determined to put it in the grave. The last government “covered up” a £22-billion black hole in the public finances, she said. Note: she was not accusing the party of simply overspending, but of overspending and then hiding this fact from the public. It was a serious charge. “They had exhausted the reserve and they knew that but nobody else did,” she claimed.
In response, Reeves set out the new mantra with which she hopes to be associated: “If we cannot afford it, we cannot do it.” It was, as one commentator noted, “reverse Keynesianism”. This was Reeves playing Margaret Thatcher. As a result, road, rail and hospital building projects were all cancelled. Most eye-catchingly of all, Reeves announced that winter fuel payments would be scrapped for pensioners not in receipt of pension credit, while plans to cap the cost of adult social care were binned. “The inheritance from the previous government is unforgivable,” the Chancellor declared. “They spent like there was no tomorrow.”
Reeves then set about rolling the pitch for a series of tax rises, welfare cuts and austerity measures to come in the Budget, which she announced would take place at the end of October. As Parliamentary performances go, Reeves’s tone of moral indignation was brutally effective. In terms of raw displays of power, it was also a moment of realisation for the Conservative Party that the period of nicey-nicey which followed the general election is well and truly over. This Labour government means business and is prepared to play rough.
The politics of yesterday’s performance are also obvious: get the unpopular stuff out of the way early while you have the political capital to do so. And yet, irrespective of the politics, there was also something desperately disappointing and, actually, boringly conventional about the substance of Reeves’s statement yesterday. Having denounced the record of the last Labour government, there was more than a whiff of early George Osborne about it all. Infrastructure projects to improve Britain’s long-term economic performance were jettisoned in order to balance day-to-day spending. This is exactly the kind of economic short-termism that economists such as Torsten Bell — now a Labour MP — have previously warned about. Britain is a monarchy where the Treasury is sovereign. And never more so than now.
Cancelling the “Dilnot” reforms which would have capped care home bills feels like a dreadful portent of what is to come. After 14 years of Tory governments trying and failing to do anything about the problem, now it looks as if Labour will do the same. The danger for Reeves is that this will become the story of the new government: conserving the status quo, prudently. And that will not be enough.
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SubscribeThe mendacity of these politicians has reached a new high.
If the following is true as reported in the Telegraph yesterday
‘Before the election, the independent Institute for Fiscal Studies said Reeves would have to find £20 billion to avoid making cuts to unprotected spending departments. This is, of course, the same number she now uses, citing supposedly surprising, new information. But when this number was put to her before the election, she denied it, insisting she did not need to put up taxes. “I don’t believe that fiddling around with tax rates is the best way to grow the economy,” she said.
No doubt she will claim that it is not a tax rise but to many older people who are not on income support but barely manage financially the effect of losing the winter fuel payment will have the same effect.
I’ve just realised that it is a risk worth taking to remove the winter fuel payment from vulnerable old people because many of them will have died before the next election. I can almost hear the SPADs in the Treasury thinking how clever they are in this timing.
Correct!! And the oh so virtuous metro Rejoiners (in their 1m+ Untaxed Cap Gain London home/rigged cash machines) will also dance with glee at the yearned for deaths of the Brexitty gammony raycist northern oldies who should NEVER have had a vote in the first place.
I was going to make the same point. There is no “surprise” black hole – it was known all along; it’s just simple dishonesty to try and pretend otherwise. But, hey it’s labour, they lie for a living.
Most striking to me is how Labour supporters seem to have gone from declaring the Tory government as “murderers” for their austerity measures to a blind and ardent supporter of austerity. Peculiar.
Regardless, this whole “20bn black hole” is just theatrical nonsense, evidenced by the fact there was “no money” for anything right up until she could buy favour with the BMA and suddenly the public purse was wide open.
The whole and entire point of winning elections is to reward your clients.
£20 billion sounds like small change in comparison with the £376 billion frittered away on the ‘pandemic’ ‘response’ in any case.
There are few things I understand less than state budgets and public financing, but I was curious as to why Labour are so surprised at their inheritance and went on a bit of a research trip.
After making my own head spin trying to wrap it around stuff like trade deficits and currency adjustments and the OBR and other stuff I’m not cut out for, I came to the following conclusion: the Tories might be guilty of some bad/sloppy practices with the budget in recent times and probably just let stuff go a bit in the final death throes of the government, but Labour is laying it on thick here to obscure a false/inadequate analysis of the “books” prior to the election which lead them to base their manifesto on skewed assumptions and make promises they now can’t keep.
Is that a fair assessment?
The country spent far too much during the pandemic – Labour were fully behind the spending and the causes of the spending and if they had the chance would have done more harm still. No party wants to admit that so they all pretend.
The only good news is that at least they are facing up to reality now, it is just they are not prepared to slaughter sacred calves like net zero to begin to resolve the problem, nor to tackle the structural issues that lead to at best sickly growth rates.
Yes. It’s odd how everyone is all getting their knickers in a twist about Britain sliding towards bankruptcy without saying a word about the costs of lockdown…or of an unreformed public sector. The latter of which is the real black hole in this situation.
Obviously Reeves, like all her predecessors since Lawson, will not even acknowledge, much less try to fix, the fundamental problem: the state employs too many people and pays many of them far too much, it rewards failure with promotion and, in order to keep the middle class onside, panders to the corporate media and a legion of special interests in the legal and other professions, parasitic NGOs and every kind of grifter. Meanwhile a large part of the money the actual grafters pay in taxes winds up in the bloated house prices of the metropolitan voters who put Labour in power.
The more that government is centralised, and the more spending power it acquires, the more leeches it will attract until it collapses under the weight of their demands. That’s the point we’ve reached.
If it’s true that costs were hidden related to asylum and railways then Reeves will have a point that there was a cover-up of sorts. The fact the provision for public sector pay was less than the Pay Review bodies more a political choice.
I suspect the Tories were slippery enough for officials to confirm Reeves has a point – to a degree. The Tories were desperate to make a tax cut that looked like it stacked up. Of course we all knew then it didn’t. And if Reeves is doing an ‘Osborne’ in really hanging the inheritance around the neck of her predecessor that’s hardly a surprise and Tories did the same.
On Dilnot – I reckon they’ll come back to it later, but not now, much like the limit on benefits to 2 children.
The infrastructure cuts perhaps more worrying given the need to boost growth and investment. One can see how Stonehedge tunnel was always going to be de-prioritised, but some of the other roads/rail network perhaps more a concern. Still this is an opening salvo and we’ll have a clearer picture of direction later this autumn, alongside how the markets react and how Business more broadly begins to react to greater stability. They are putting alot on the latter. Some wealth taxes inevitable and hence why they were very specific in their wording during the campaign.
One can see how Stonehedge tunnel was always going to be de-prioritised,
Yes, maybe all those Tories and LimpDems will be more inclined to vote Labour once they’ve been completely pauperised, eh?
I reckon big increase in Inheritance tax coming, paid for mainly by Tory voters popping their clogs over next 5 yrs who weren’t ever voting Lab anyway. Happy days.
I doubt that Labour will attack the property-rich home counties voters that put them in office in this way. They’re much more likely to go after wealth creators since their spite and hatred of independent people is almost matched by their economic illiteracy.
Like Osborne she is the political figure who really should be Prime Minister, working towards the Labour government’s Eurofederal objectives – monetary as well as administrative, as well as rewarding their friends in the unions.
Starmer is so poor he comes across as even more ineffectual than Cameron – far more ineffectual in fact. Streeting could deputy for PM Reeves and set about changing the NHS funding model.
We all knew that we were being lied to throughout the GE campaign by all parties. It would have been nice to have had a proper discussion on where the axe needed to fall. My vote would have gone toward cutting the costs of all the new people arriving by cutting the number of new people arriving and scrapping Net Zero. These were Reform policies but they did not have the courage to play them against the back drop of the reality of the financial situation, but instead also wanted to claim their proposals would balance the budget
I’m likely to ‘suffer’ from reduced benefits and increased taxes. It may even be necessary as part of getting the nation’s finances back in balance (which will take a long, long, time).
But a noteworthy feature of these ‘adjustments’ is that there will be no reduction in the size of the ‘State’ – if anything the State will grow to include more bureaucracy. The remedy will be the cause of fresh disfunction.
Prudence?? Reeves’ comic Mrs T dominatrix act does not mask her base mendacity, though that slippery starmerism was already baked in with its near fraudulent electoral tricks. Cancelling road and rail infrastructure is imprudent. Bending the knee to their greedy militant trade union backers was imprudent and cowardly. Unleashing class war on our elite education system and the Rich is imprudent and destructive. Permitting more mad eco Millibandism in energy policy (no one is commenting on their thuggish fresh assault on our North Sea Oil industry) is far far beyond imprudent. It is catastrophic and will lead to business ruin, cold pensioners and blackouts. Along with their refreshed Zero Deterrent Open Border alliance with the People Traffickers (expect hotel costs of 15bn soon) and their gutless betrayals of Israel to appease the angry sectarians, we already see the dead eyed fanaticism of these avowed Progressive/Socialist ideologues. The markets will see through this shabby charade soon enough. The thin dream of ‘Growth’ has already died. They despise the weslth creators. Our freefall is set to accelerate.
Might seem like a naive question, but why did Labour so desperately want to be in government, if all it means is a continuation of the same kind of cookie-cutter technocratic and financial managers as the old government, without much power or vision.
What’s the point? They genuinely think they are making the world a better place via some mild tweaks, and ‘progressive’ coded legal changes and institutional entrenchment?