Three weeks until Budget Day – and now Rachel Reeves is ‘honest’ about taxes | Marina Hyde
TIt would have been a completely understandable day for Rachel Reeves to cry at work. “I’m really clear, I’m not coming back with more borrowing or more taxes,” the finance minister told the central bank less than a year ago. Can I shock you…? “We cleared everything,” she continued less than 12 months ago. “[We] Put public finances and public services on a firm footing, and as a result we will never have to budget like this again. Again: Can I shock you…?
So, on to Reeves’ appearance on the podium from Downing Street this morning. Emotionally, it was like knowing you were going to be ineptly robbed in three weeks, but having to listen to a speech from the thief about the context of it all. Or perhaps a letter from an asteroid trying to get out in front of what people will say about it when it craters the West Midlands.
Reeves’ delivery is more wooden than the boards behind her today, and has all the verve to let us know we’re seeing higher than usual call volumes. The budget estimated wait time is 22 days. There were moments in this journey where it seemed as if the counselor’s job had truly become automated. It must have been completely unplayable on the complaints line at HBOS.
However, please listen carefully as their menu options have changed recently. “The world has thrown more challenges our way,” Reeves explained, with the air of a woman who spent the four months between her general election victory and her first budget last fall telling everyone how absolutely bad the situation was, and then was surprised by a collapse in consumer, business and investor confidence, and a largely unhelpful economic climate of pessimism about what was to come. Fortunately, Reeves had a cunning plan up her sleeve at the time: increasing employers’ National Insurance contributions, which addressed any remaining traces of optimism.
However, once again this morning, the government has chosen to act as a Cassandra at its next fiscal event. Maybe because it went so well last time. After swearing before the election that there were no “Ifs, Nos, No Buts” in her tax pledges, today Reeves really wanted to introduce you to Mr. If, Miss And and President But. We just need Mrs. Fully Costed to complete the set.
A lot of things seem to have eaten into Reeves’ homework, but one of the biggest bites appears to have been taken by the Office of Budget Oversight, the Office for Budget Responsibility. The decision by the Office for Budget Responsibility to lower its forecasts for the economy’s productivity was treated as a dangerous curveball, rather than, arguably, a realistic deal with the facts in hindsight. For someone who spent half of this speech and Q&A declaring that she had to deal with “the world as I find it,” Reeves certainly gave the impression that she could dismiss gravity or the first law of thermodynamics as merely the opinion of some unelected physicist.
Another challenge that the world seems to have thrown its way is the discovery that you can’t get a single spending cut through the parliamentary Labor Party. Again, if only there were signs. Reeves clearly didn’t put it that way. She said she did not think it was fair “to blame the parliamentary Labor Party for the OBR’s supply-side review”. I don’t think it’s fair that half the members of the parliamentary Labor Party don’t have the first idea what “supply side” means. So we all have to live with injustice.
Other omissions? It was disappointing that no one asked the Chancellor whether she defined herself as a “working person”, or one of that mythical tribe whose taxes were never raised. Last week, Sam Coates on Sky I got the definition The ‘workers’ that the Treasury is supposed to work out ahead of the budget later this month, and who appear to represent the bottom two-thirds of earners – meaning no one earning more than £45,000 a year. “It is extraordinary if true,” said former IFS director Paul Johnson Java observed. But surely many experienced plumbers and train conductors are aware that they are no longer working people, and have moved with immediate effect into the upper category of Labour: the broad-shouldered/featured/fatty ones. By this definition, a chancellor is definitely not a working person, even though Rachel always tells you that she works tirelessly to do this or that for the country.
Again, the consultant likes the simple way of putting things – black holes, fixing the foundation of a house – so this is a way for her. Why does she only seem to be catching up now with the things so many people told her before the last election? Why is the long-term state of the British economy a surprise only to Reeves and the cadre of full-time dreamers who thought Starmer’s Labor were ‘the big boys’? As many made clear before the general election, Labour’s promises on tax and cajoling on growth were completely unrealistic and unthought of. In fact, it was such obvious confusion or deliberate misdirection that it was a lie for my money. Is it really possible that the Chancellor has not grasped the stark facts of the “books” – which, as with the IFS, are always open? He noted at the time? No, it can’t. As she put it about the details of public finances in the run-up to last year’s election: “We now have the Office for Budget Responsibility… I don’t need to win the election to find out.” Halloween may be over, but scores of these quotes will haunt Reeves for the foreseeable future.
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She was right about one thing today, albeit unintentionally: “It’s about honesty.” Clearly, Reeves would like to think differently, but it seems like it’s already too late for her to be successfully honest. The run-up to the general election, which Labor was to win by a landslide, was the moment for Labor to be honest. As for her general position on the economy, almost everything since then has stemmed from that conscious decision not to talk to voters about things she must have known at the time. Through some of today’s speech filler, Reeves spoke vaguely about making the UK an attractive investment for future industries such as artificial intelligence and biotechnology. Of course we’re all for it, but for her personal future, the Chancellor would be better off attracting a time machine company.
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Marina Hyde is a columnist for The Guardian
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