4 days ago
Rachel Reeves's days as Chancellor are numbered
The Labour Left is reportedly delighted about reports that Chancellor Rachel Reeves has been forced to back down from attempts to cut spending on a key net zero programme.
The Prime Minister chose to side with Ed Miliband rather than his own Chancellor over the climate secretary's £13 billion warm homes programme, which will now emerge largely undiluted following next week's spending review.
The latest reversal for Reeves's attempts to impose some fiscal discipline on her cabinet colleagues will not help dispel rumours that she is being lined up for a change of job at the next reshuffle.
In a speech yesterday she warned that 'not every department will get everything that they want next week' and that she has had to 'say no' to spending requests that, in an ideal world, she would support.
But such repeated assertions of tough spending choices and ruthless budget decisions, all for the long term good of the country, sound increasingly meaningless when they coincide with a series of U-turns on spending cuts already made.
Reeves's infamous decision to scrap winter fuel payments for some pensioners has already been walked back by the Prime Minister, even though it remains unclear where the money necessary to reverse at least part of the cut will come from.
Meanwhile Reeves remains under political pressure from the direction of the Deputy Prime Minister's office: Angela Rayner has boosted her own popularity among backbenchers by suggesting in a (conveniently leaked) memo to the Chancellor that tax rises, rather than departmental budget cuts, should be considered to fund extra spending. This is music to the ears of Labour activists too, who never met a tax rise they didn't like.
The next big spending challenge for Reeves and the Government is more complicated than an attempt to divert billions away from benefit claimants and towards other priorities: the Work and Pensions Secretary, Liz Kendall, believes structural changes to the benefits regime are needed in order to create new incentives for claimants to seek paid employment. This is a generational change that would also, as it happens, save money in the long term.
But that is not how many backbenchers see it. Long-term plans don't help MPs hoping to defend their parliamentary majorities in the next four years and even fewer of them are willing to defend the changes that came to the Chancellor's aid over the winter fuel payments.
Reeves is seen increasingly as a bean counter; she doesn't have the same reach in the party that one of her predecessors, Gordon Brown, had as Chancellor, and which gave him so much leeway when making tough and 'prudent' economic choices. All it will take for her to lose all the authority necessary to remain in her job is one more policy reversal. She certainly cannot afford to lose any more spending battles with cabinet colleagues while retaining what is left of her stated willingness to tell them 'no'.
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