Rachel Reeves is in danger of being boxed in by her own rules
The story of this Spring Statement is that welfare has been cut back to make up for a notable rise in the cost of servicing the national debt. There is also a trim to the money being given to government departments.There is relatively little else actually happening in policy terms. There were no tax rises, no changes to Chancellor Rachel Reeves' borrowing rules and as expected, this was definitely not a Budget.The real question now is whether the chancellor can escape from a never-ending cycle of microhaggling with the government's independent forecaster the Office for Budget Responsibility (OBR) in this way, twice a year for the rest of the Parliament.When asked about whether new tax rises could now come in the Autumn like last year, she said emphatically: "We'll never have to do a Budget like that again."But the numbers are precarious and extremely sensitive to the economic and political changes around the world.If the US imposes 20% tariffs on the UK next week, it could lead to a downgrade in UK growth and "wipe out" the £9.9bn headroom the chancellor has to meet her borrowing rule, the OBR chairman, Richard Hughes, told me.Other uncertainties include higher interest rates and lower UK productivity, he said, adding that "the risks are very elevated".That is why growth, confidence, and comprehensive economic strategy is so important.By June there should be new plans for trade, industry and infrastructure. In the next few weeks, there could be an economic deal with the US, and the start of a Brexit reset with the EU.Despite the uncertainties, the OBR's judgement on the economy was better than had been expected. This year's growth was downgraded, but close to normal levels of growth are predicted to return in later years.
Live: Follow the latest on the chancellor's announcementKey points from the Spring Statement at a glanceThree ways the Spring Statement could affect youTaxes could still rise despite welfare cuts, economists warnWatch: Henry Zeffman on what you need to know...in 58 seconds
Bob the Builder bet
The OBR's acknowledgment that the government's planning reforms could significantly boost house building, was seen as a major win in Downing Street.It's a policy that doesn't involve taxes or spending yet is expected to provide a huge boost to growth.At this stage this is not about an extra brick being laid or even planning approval, but it is a "spreadsheet win" that eased the chancellor's fiscal pain.This comes as a result of local authority housing targets and council land being freed up.When the Planning and Infrastructure Bill passes later this year, which strips back judicial reviews, there should be a further increase in predicted growth.But the test is obviously actual spades and diggers in the ground and architects' plans being approved. This government is now all-in on Bob the Builder.There was some accountancy-driven cunning. Lists of public defence-related spending up and down the UK came from the unconstrained capital budget for buildings, which is basically exempt from the chancellor's non-negotiable financial rule to only borrow to fund day to day spending.But the cuts to welfare are very real. The 250,000 increase in people in poverty due to the cuts to health-related benefits does not include the impact of recipients getting new jobs. The Impact Assessment seems to confirm that the aim of the policy is more about saving cash than fundamental reform. In this and in other areas questions arise about whether the "OBR tail wags the policy dog" - i.e. is this really the way long-term policy should be formed?The big picture is that all of this becomes a lot easier if growth returns and interest costs calm.In the dreams of Number 11, while we assume the debate in autumn will be about what further tax rises are required, it is possible that by the time of October's Budget, this could happen.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Scotsman
2 hours ago
- Scotsman
The 6-point plan Scottish Labour must seize on to ram home the advantage against 'confused' SNP
Sign up to our daily newsletter – Regular news stories and round-ups from around Scotland direct to your inbox Sign up Thank you for signing up! Did you know with a Digital Subscription to The Scotsman, you can get unlimited access to the website including our premium content, as well as benefiting from fewer ads, loyalty rewards and much more. Learn More Sorry, there seem to be some issues. Please try again later. Submitting... Against, the odds, depressing poll numbers and barely believable claims of Nigel Farage's invincibility, this was a significant victory for Labour and a boost for the leadership of Anas Sarwar. The phrase often attributed to Mark Twain seems appropriate - 'reports of my death have been greatly exaggerated'. Advertisement Hide Ad Advertisement Hide Ad Anas Sarwar, leader of the Scottish Labour party, celebrates with deputy leader Jackie Baillie. | Lisa Ferguson This by-election is also a timely reminder that after 18 years in government, the SNP look weary, divided and lacking momentum. The reality for most Scots is a governing party that has become less concerned with fighting Westminster, but is still not tackling with conviction the many policy areas impacting the everyday lives of the electors. Farage and Reform remain a threat. They are eating into the Scottish Tory vote and act primarily as a party of protest with a populist, ultranationalist (English) and isolationist agenda. The achievement to date, in the form of Ukip, was Brexit, an act of national insanity, more recently their barely concealed racist attack on the Scottish Labour Leader on social media and yesterday the offer of a referendum to ban the burka. The Reform party has no pedigree, or political creed, or positive policies and is Trumpian in it's behaviour and political outlook. Its appeal reflects protest, opportunism, cheap patriotism and a claim to be on the side of working people and a dislike of elites. Advertisement Hide Ad Advertisement Hide Ad This is a poisonous fraud, a vulture party exposing predatory behaviour, and an amateur version of populist parties elsewhere in Europe. But because they represent the 'anti-politics' lurking in the minds of many in the UK, they are dangerous, especially under the first-past-the-post electoral system. Their sickening addiction to barely concealed racism, hatred of immigrants and contempt for the European Union are unfortunately helping to divide and possibly destroy a once respected Conservative Party. For the SNP, the picture is more confused. Scotland is stalled as a nation. Scotland is bitterly divided on its constitutional future, where many Scots see campaigning on Independence as a major distraction from the effective governance of the nation. John Swinney in Hamilton ahead of the Hamilton, Larkhall and Stonehouse by-election (Photo by Jeff) | Getty Images For the SNP, the drive to independence has lost momentum. This has led to much soul searching over the party's immediate tactics and to what extent there should be a more enthusiastic push towards their primary purpose as a party. It is a curious irony of politics that Scottish Labour now faces two nationalist parties that represent protest as a political weapon against the UK government. This provides an opportunity for Scottish Labour to project a more unified approach to our politics and hammer home the point that, as happened between 1999 and 2007, that rebuilding a critical harmony between Holyrood and Westminster and building on devolution is long overdue. Advertisement Hide Ad Advertisement Hide Ad This is 'Unfinished Business', representing a journey, not a destination - opening up a new era of devolved government that makes more of Scotland's potential and places our priorities much higher up the Westminster agenda and the public agenda. This, of course, requires the UK government to waken up to the wisdom of four-nation governance and make much more significant concessions, opening up the possibility of a more Federated form of Union in the future as even England opens up to the benefits of decentralisation, which may then evolve into something more significant. This would help allay the fears of many Labour politicians and supporters that being more Scottish would be equated with support for independence. Advertisement Hide Ad Advertisement Hide Ad The remark from President Roosevelt seems appropriate. 'The only thing we have to fear is fear itself,' he said. But for all the new opportunities facing Labour in Scotland, the fact the SNP has been in government for 18 years is hugely significant. Being in government is hard work and the pressures and never-ending challenges of office can be draining. But for the SNP, the constant turmoil of competing priorities is clearly taking its toll. Despite John Swinney steadying the ship after the Sturgeon era, the conflict between governing and campaigning is taking its toll as are the divisions within the SNP about priorities. This affords Labour the opportunity to become once again the party of choice for an ambitious Scotland. For the labour Party in Scotland, there is, of course, more work to be done after a period of stress in the first year of the new Labour government at Westminster. Policy missteps, the impression that Scotland was slipping down the Westminster agenda, and proposed changes in welfare and cuts in benefits have concerned traditional Labour voters and supporters, and Mr Sarwar. These darker days are easing and a more progressive agenda looks likely. Advertisement Hide Ad Advertisement Hide Ad Scottish Labour Deputy leader Jackie Ballie, Scottish Labour leader Anas Sarwar and Davy Russell, newly elected Scottish Labour MSP for Hamilton, Larkhall and Stonehouse yesterday (Picture: Jeff) First Scottish Labour should continue to value distinctive Scottish perspectives on UK issues and be confident in emphasising differences with Westminster, when appropriate. Second, the Labour Leader should follow the example of the Welsh Senedd Leader who does contest unpopular Westminster policies publicly in her role of defending Wales. Third, Labour should intensify their assault on SNP policy failures in areas such as, education, health, prisons, industrial strategy and poverty - the peoples agenda. Fourth, there is a pressing need to break the tribalism in the Scottish Parliament and accept that 'coalitions of the willing' could achieve more consensus as happened with a real coalition in the period 1999 to 2007. Advertisement Hide Ad Advertisement Hide Ad Five, assert a greater degree of willingness for dialogue and action with the other nations and the UK where issues and differences are resolved between governments, not in the Supreme Court. Warfare provides good copy but poor policy. Six, there is a need for the Parliament to be freed from the tyranny of the Scottish Government who are suffocating innovation. The boundaries have become blurred. The legislature should represent all parties. As 2026 approaches, Labour can offer a new deal for Scots and realise the potential of a remarkable idea, devolution, which is still in its infancy. Sir Keir Starmer must work to better understand that devolution can't stand still and accept that further change is essential not just because it makes sense, but because it is the only way for Scotland to be content within a changing Union and knowing there are attractive alternatives to independence. Scotland is a remarkable nation; it is also unfinished business. The next phase of devolution is long overdue and is required to set out a vision for the next quarter of a century. Advertisement Hide Ad Advertisement Hide Ad More Britishness will not answer the 'Scottish Question', but Gordon Brown's idea of a 'Union of the Nations' could work if Westminster accepted the fact the debate about Scotland has a long way to go. This article started with my description of Labour's victory in Hamilton being significant, but it is more than that. Spectacular would be more appropriate in relation to the victory in difficult circumstances, but mainly because of the potential it provides for Scottish Labour to once again be at the heart of how Scotland is governed. Sarwar's rallying call should be, 'the chance to serve our country – that is all we ask', which were the late John Smith's last words.
Scotsman
2 hours ago
- Scotsman
Mainstreaming of far-right ideas in UK politics shows why John Swinney was right to raise alarm
Sign up to our daily newsletter – Regular news stories and round-ups from around Scotland direct to your inbox Sign up Thank you for signing up! Did you know with a Digital Subscription to The Scotsman, you can get unlimited access to the website including our premium content, as well as benefiting from fewer ads, loyalty rewards and much more. Learn More Sorry, there seem to be some issues. Please try again later. Submitting... Received wisdom at Westminster has it that the far-right has never made it into UK politics. Coupled with that theory is then the debate by the same commentators around what constitutes the 'far-right'. However using the measurement of policies pursued, which is, after all, the very essence of a political movement or party, the far-right has most certainly arrived in UK politics. UK parties, across the political spectrum, now embrace the hardest of hard Brexit, unthinkable even in the aftermath of the referendum in June 2016, and a policy that has done untold damage to the economy and our rights. We also had a government that promoted the sending of asylum seekers to Rwanda and MPs who openly campaign on leaving the European Convention on Human Rights (ECHR), which has underpinned our rights since the end of the Second World War. Were the UK to leave, it would be joining Russia and Belarus in doing so, hardly polite company. Advertisement Hide Ad Advertisement Hide Ad Brexit, leaving the ECHR, and the Rwanda scheme are or were mainstream policy proposals in the UK yet they are policies that far-right parties elsewhere in Europe would baulk at. Even the hardest of hard-right parties in other parts of Europe such as the National Rally in France, the Vlaams Belaang in Belgium or Alternative fur Deutschland in Germany have abandoned plans to leave the EU, given the UK's Brexit debacle. John Swinney's stances on the EU, Donald Trump and migration, among others, have won plaudits (Picture: Jeff J Mitchell) | Getty Images An attack on justice Yet despite these policy failures, the mainstreaming of the far-right has become all too common in our politics along with their tactics. Over the past few days alone, Conservative Shadow Justice Secretary, Robert Jenrick, attacked the Labour Attorney General for doing his job and defending his clients. His remarks were described by former Conservative Attorney General Dominic Grieve 'as a direct attack on our principles of justice'. As we saw in this week's Hamilton by-election, we in Scotland are certainly not immune. Nigel Farage's attack on Anas Sarwar, which he doubled down on when challenged by the press, should act as a warning to us all. Advertisement Hide Ad Advertisement Hide Ad Such remarks are unacceptable and whereas I may have legitimate policy differences with the Scottish Labour leader, they should have no place in our political discourse. For all the heat of the campaign in the run-up to what was a hard-fought by-election, it was good to see SNP and Labour leaders call out these disgraceful comments. Zia Yusuf's resignation as chair of Reform on Thursday and his concerns around Reform in the Commons should also act as a warning. Calling out bigotry That is why the First Minister was right to bring together colleagues from across the political spectrum in a summit seeking to 'lock out' Reform from Holyrood earlier this year. John Swinney is right to call out their policies and the 'bigotry' that they represent and to call out Farage as 'an accomplice of the Russian agenda'. Advertisement Hide Ad Advertisement Hide Ad Fair play to the politicians and representatives of civil society who put any political differences aside and joined the First Minister. That meeting was criticised at the time by the Conservatives and a range of commentators. Given Reform's tactics and language over the course of the by-election campaign, we have seen just how badly needed that stance was and remains. Labour will be pleased with Thursday's win, and I congratulate them on it, however, no party can afford to be complacent about Reform. One of the lessons from Hamilton must be that the key to taking on the far-right is to challenge them on their ideas. Nigel Farage's track record is not a particularly good one. He has been a driving force campaigning to leave the EU for decades. That was a decision that has exacerbated the cost-of-living crisis, removed rights from UK citizens, damaged business, especially small-to-medium enterprises (SMEs) and ultimately made us all poorer. Advertisement Hide Ad Advertisement Hide Ad He backed Donald Trump whose presidency has destabilised the world, seen tariffs introduced that have damaged the global economy, and undermined efforts to support Ukraine against Russian aggression. 'Island of Strangers' The Reform policy platform is weak. For their opponents, that should provide ample targets. Yet, in the Westminster bubble their policies are given far too much credibility. There is an omertà around discussing the glaring failure of the Brexit experiment and the less said about Keir Starmer's 'Island of Strangers' speech on migration frankly the better. John Swinney would be the first to admit that the Scottish Government haven't got everything right. However, on the big calls around our relationship with the EU, the impact of Donald Trump's presidency, migration, child poverty and the rights we should enjoy as citizens, the SNP leader has maintained credibility for his stances, winning plaudits at Westminster and further afield. Politics is about ideas and Reform's are simply not good ones. The Conservatives and Reform are increasingly aligning on a range of policies and a pact or even merger is not out of the question. This is to be expected, given that Reform draws its politicians and many voters from the Conservatives. They have, in turn, turned their backs on One Nation conservatism, and instead the party is dominated by the Johnson/Truss populist wing, which is not so different from Farage and Reform. Advertisement Hide Ad Advertisement Hide Ad This week's by-election and the preceding campaign must act as a wake-up call. During the run-up to the Holyrood elections, there is an opportunity for all parties to set out their vision for Scotland. On the one hand, there is an inclusive, outward-looking and internationalist vision represented by John Swinney, on the other is Reform's inward and exclusive offering. I know which one I'm backing.
New Statesman
2 hours ago
- New Statesman
Rachel Reeves wants to level up your commute. Does she have the money?
'Biggest ever investment in city region local transport as Chancellor vows the 'Renewal of Britain',' trumpeted a government press release on 4 June. It was one of those headlines that feels like it should come with a '[citation needed]' tag. Have they accounted for inflation? When they say 'city region', are they gerrymandering to only count places officially designated by this relatively recent term? The total cash adds up to £15.6bn. There's a risk of apples and oranges here; yet it seems at least worth noting that London's Elizabeth Line cost £18.8bn. But let's hold the cynicism for the moment, because all this looks suspiciously like that rarest thing: good news from Rachel Reeves. The announcement more than doubles the real terms capital funding for nine city regions from 2027/28 to 2031/32: £2.4bn for the West Midlands, £2.5bn for Greater Manchester and so on. The list of 'projects likely to be taken forward by mayors' that accompanies it includes a dizzying number of potential schemes: an eastern extension of the Midlands Metro; new tram stops and a potential Stockport extension for Manchester's Metrolink; new rolling stock and station upgrades on the Sheffield Supertram; and so on. All this is cheering, even if you're not the sort of person who can while away a happy hour looking at public transport maps of cities you've never even visited, because there are reasons to think poor transport is one cause of Britain's economic malaise. Productivity, after all, tends to correlate with city size, and poor connectivity means that our cities are functionally a lot smaller than they look: the transport and economy writer Tom Forth has shown that traffic congestion means that Birmingham functionally shrinks by half in rush hour. It's not just that cities with good public transport are nicer, though they are: it's that, by linking employers with a larger pool of potential employees, they're often more prosperous. It's good news for political reasons, too. So much of what this government is doing – including, probably, the bulk of next week's spending review – feels unnervingly like presiding over decline. This isn't that. It has been pitched as a move towards rewriting the 'Green Book', the guidance the Treasury uses to value potential spending commitments – and which tends, because of London's prosperity and sheer size, to funnel money to the south-east. By allocating money to other regions, between them containing nearly 18 million people – over a third of England's population outside London – it's a baby step towards the levelling up the last government promised but failed to deliver. Not everyone is convinced: plenty warn this all has unnerving parallels with Rishi Sunak's proposals for 'Network North', which was neither a network nor really about the north. (The list of projects included stretched, hilariously, to Plymouth.) But I think that's too kind to Sunak and unfair on Reeves: there is a difference between a rapidly assembled list of unfunded projects press-released to counteract some bad headlines about the dismemberment of HS2 and an actual funding announcement by a sitting Chancellor. Will it be truly transformative? There appear to be a few shortcomings. For example, absent from the announcement is the long-awaited and repeatedly cancelled rebuild of Manchester Piccadilly station, which has long acted as a bottleneck for rail services across the north. Another absence is HS2 itself, which (sing along if you know the tune) would increase capacity on local services by getting fast trains out of the way. These would do wonders for multiple city regions – but they are excluded, presumably either because they are not 'city region' projects but strategic rail ones, or because they just cost too much. The last critique concerns the politics. It's great to see a government breaking with tradition and increasing, rather than slashing, capital funding – but the reason most chancellors tend to cut is because these projects take so long to show any benefits. The suggested timeline for the proposed West Yorkshire Mass Transit is both illustrative and absurd: 'spades in the ground' by 2028, the first services in the mid 2030s. Until then, it won't transform the economy, and may not help much at the next election – it could, in fact, do the opposite, by mobilising opponents who fear disruption to roads. It's good to see a chancellor invest. Let's hope she doesn't regret it. Subscribe to The New Statesman today from only £8.99 per month Subscribe [See more: Inside No 10's new dysfunction] Related
