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New Statesman
3 days ago
- Business
- New Statesman
Rachel Reeves returns to her roots
Photo byEarlier this year one No 10 aide told me that they missed the old Rachel Reeves. A Chancellor who denounced austerity in opposition had ended up defined by a cut (to winter fuel payments). Her doctrine of 'securonomics' had been marginalised in favour of a more orthodox Treasury approach. And a concern with regional inequality had given way to a focus on London and the south-east. Here is how Reeves ended up in the trough of unpopularity among party as well as country. The Chancellor needed to use yesterday's Spending Review as a reset moment – and it was. 'It's not the SR that HMT [Treasury] officials would have written, which is a very good thing,' a Starmer ally told me. The charge against Reeves was that she had become an unthinking automaton – one who selected winter fuel cuts from a routine menu of Treasury options, heedless of the political consequences. But yesterday's statement positioned her as a Chancellor making distinctively Labour choices. Reeves' advance U-turn on winter fuel already marked a return to more familiar territory. Labour MPs struggled to defend a policy that removed the benefit from almost all pensioners. Now, with it restored to three-quarters, a traditional redistributive argument can be made. Reeves' aides always felt there was something incongruous about the opprobrium that she attracted from the left. Her first Budget, after all, raised taxes by £41.5bn and increased spending by £70bn a year, taking the UK far closer to its social-democratic neighbours. But style matters as well as substance. Reeves' speech on growth earlier this year – in which she announced Heathrow expansion – cheered business though left plenty in her party cold. Yesterday's statement was replete with lines designed to show that the Chancellor has not forgotten her past. Her aim, she declared, was 'to ensure that renewal is felt in people's everyday lives, in their job and on their high streets' (a passage that recalled Reeves' 2018 pamphlet The Everyday Economy). As shadow chancellor, Reeves disowned New Labour's approach to globalisation, embracing a more protective and interventionist state. That position was reaffirmed yesterday – 'Put simply: where things are made, and who makes them, matters,' said Reeves, hailing the publicly-owned GB Energy and the rescue of British Steel (Nick Garland, the author of her heterodox Mais Lecture, was among those who contributed to the speech). Subscribe to The New Statesman today from only £8.99 per month Subscribe If there was anything Osbornite about the Spending Review, it was not in its fiscal policy – the former chancellor would never accept such a permanent increase in the size of the state (heading for 44.6 per cent of GDP) – but in its raw political intent. From the Treasury, Osborne shielded his party's base from austerity and sought to use economic policy to construct the Tory majorities of the future. Reeves' announcement of £15bn for transport projects outside London – across the Red Wall seats where Labour MPs must fend off Reform – mirrored this approach. Her decision to prioritise the NHS – even as some cast Britain as a health service with a country attached – was similarly emblematic of the party of Aneurin Bevan. 'People are only going to know the good news that we set out today if we campaign on it, if we deliver the leaflets, if we speak to people on the doorstep,' declared Reeves, who Labour MPs regard as a more natural politician than Starmer, at last night's Parliamentary Labour Party meeting. The road ahead is strewn with risks. I noted last month that Labour's new emphasis on an improving economy was a hostage to fortune – the news that GDP shrunk by 0.3 per cent in April has confirmed as much. But by returning to her roots, Reeves has reassured her party that it has one of its own at the Treasury. [See also: Labour is losing Wales] Related
Yahoo
26-03-2025
- Business
- Yahoo
Anxiety over welfare cuts rises among Labour MPs
There has been some unease in Labour's ranks over the planned savings in the welfare budget. The government's newly published assessment of the impact of the changes has increased that anxiety. The contents – with its estimates of increased poverty levels - show that talk of difficult decisions is not mere ministerial sloganeering. While polls suggest tackling the benefits bill is popular, voters and Labour MPs tend to be more squeamish when cuts affect disabled people. The scale of those cuts has led some Labour MPs publicly to declare for the first time today that they won't vote for the welfare changes – though any rebellion is ultimately likely to be unsuccessful. Perhaps of greater concern to Chancellor Rachel Reeves is that MPs on her own side are openly challenging her approach, and putting forward alternatives. Those around the chancellor had believed that any argument over her iron-clad fiscal rules on debt and borrowing had been won well before polling day. Many of the new MPs were regarded as leadership loyalists, and it was assumed that they bought the argument that Labour had to kill off any impression that it would tax too highly and spend too much. It was also assumed they were aware that any major change to rules on borrowing and debt would invite unflattering comparisons with the short-lived regime of former prime minister Liz Truss. But some Labour MPs are finding an increasing number of difficult decisions are, well – increasingly difficult. Key points from the Spring Statement at a glance Three ways the changes could affect you and your money Who is affected by the Pip and universal credit changes? Watch: Henry Zeffman on what you need to 58 seconds In the Commons on Wednesday, the Labour chair of the cross-party work and pensions committee, Debbie Abrahams, supported moves to get people back into work. But she suggested that some of the changes to benefit levels would undermine rather than bolster elusive growth. She asked bluntly: "How will making people sicker and poorer help in driving our economy up?" And left-wing MPs are publicly promoting alternatives. Bradford MP Imran Hussain called for a wealth tax and former frontbencher Andy McDonald demanded a hike in capital gains tax. Big Labour-supporting unions such as Unite take a similar view. Privately an MP regarded as being on the right of the party is advocating a temporary tax on wealth until the economy picks up. And a prominent Labour backbencher – who chaired a cross-party committee – had a range of possible options for bringing in more revenue. They included a council tax revaluation; less pensions tax relief for the better off; a land tax; a new tax on property owners and not tenants. That backbench MP was none other than Rachel Reeves herself – in The Everyday Economy, a pamphlet she penned in 2018. Think tanks - such as the centrist Social Market Foundation – have also pushed alternative options such as cancelling the Lower Thames Crossing, taxing empty property, and taking another look at the triple lock, which can lead to inflation-busting increases in state pensions. But as well as ignoring her younger self, the current debate the chancellor would really like to extinguish is whether to change - or bypass - her fiscal rules. These can lead to a spending squeeze in order to convince the Office for Budget Responsibility she's on course to have debt falling and day-to-day spending in balance by the end of the Parliament. What ignited - or at least re-ignited - the debate was the decision of the German parliament to exempt defence and infrastructure investment from their equivalent rules. So it's no longer just those on Labour's left who are calling for more flexibility. Some serving ministers privately believe that if – as the chancellor says – "the world has changed", then her rules can change with it. One of former prime minister Tony Blair's closest former advisers – John McTernan – has advocated an exemption for defence in the New Statesman. The Fabian Society – a think tank affiliated to Labour – has said that if the UK faces further fiscal pressure, the government must look again "at how it can raise revenue progressively to protect our public services and support the vulnerable". Rachel Reeves made it clear in her Spring Statement that her rules – which she tweaked at the Budget – were "non-negotiable". And the Treasury insists that following Germany's lead would push up the cost of borrowing – and therefore mortgages – even further. The chancellor has insisted that to ensure economic stability, there is no alternative to her approach. With fears that stubbornly sluggish growth will lead to more difficult decisions at the autumn Budget, some voices on the left and centre-left are now begging to differ. Spring Statement 2025: Key points at a glance Reeves squeezes benefits as 2025 growth forecast halved
BBC News
26-03-2025
- Business
- BBC News
Anxiety over welfare cuts rises among Labour MPs
There has been some unease in Labour's ranks over the planned savings in the welfare government's newly published assessment of the impact of the changes has increased that contents – with its estimates of increased poverty levels - show that talk of difficult decisions is not mere ministerial polls suggest tackling the benefits bill is popular, voters and Labour MPs tend to be more squeamish when cuts affect disabled scale of those cuts has led some Labour MPs publicly to declare for the first time today that they won't vote for the welfare changes – though any rebellion is ultimately likely to be unsuccessful. Perhaps of greater concern to Chancellor Rachel Reeves is that MPs on her own side are openly challenging her approach, and putting forward around the chancellor had believed that any argument over her iron-clad fiscal rules on debt and borrowing had been won well before polling of the new MPs were regarded as leadership loyalists, and it was assumed that they bought the argument that Labour had to kill off any impression that it would tax too highly and spend too was also assumed they were aware that any major change to rules on borrowing and debt would invite unflattering comparisons with the short-lived regime of former prime minister Liz some Labour MPs are finding an increasing number of difficult decisions are, well – increasingly difficult. Key points from the Spring Statement at a glanceThree ways the changes could affect you and your moneyWho is affected by the Pip and universal credit changes?Watch: Henry Zeffman on what you need to 58 seconds In the Commons on Wednesday, the Labour chair of the cross-party work and pensions committee, Debbie Abrahams, supported moves to get people back into she suggested that some of the changes to benefit levels would undermine rather than bolster elusive asked bluntly: "How will making people sicker and poorer help in driving our economy up?"And left-wing MPs are publicly promoting alternatives. Bradford MP Imran Hussain called for a wealth tax and former frontbencher Andy McDonald demanded a hike in capital gains Labour-supporting unions such as Unite take a similar an MP regarded as being on the right of the party is advocating a temporary tax on wealth until the economy picks a prominent Labour backbencher – who chaired a cross-party committee – had a range of possible options for bringing in more included a council tax revaluation; less pensions tax relief for the better off; a land tax; a new tax on property owners and not backbench MP was none other than Rachel Reeves herself – in The Everyday Economy, a pamphlet she penned in 2018. Think tanks - such as the centrist Social Market Foundation – have also pushed alternative options such as cancelling the Lower Thames Crossing, taxing empty property, and taking another look at the triple lock, which can lead to inflation-busting increases in state as well as ignoring her younger self, the current debate the chancellor would really like to extinguish is whether to change - or bypass - her fiscal can lead to a spending squeeze in order to convince the Office for Budget Responsibility she's on course to have debt falling and day-to-day spending in balance by the end of the ignited - or at least re-ignited - the debate was the decision of the German parliament to exempt defence and infrastructure investment from their equivalent rules. So it's no longer just those on Labour's left who are calling for more flexibility. Some serving ministers privately believe that if – as the chancellor says – "the world has changed", then her rules can change with of former prime minister Tony Blair's closest former advisers – John McTernan – has advocated an exemption for defence in the New Fabian Society – a think tank affiliated to Labour – has said that if the UK faces further fiscal pressure, the government must look again "at how it can raise revenue progressively to protect our public services and support the vulnerable".Rachel Reeves made it clear in her Spring Statement that her rules – which she tweaked at the Budget – were "non-negotiable".And the Treasury insists that following Germany's lead would push up the cost of borrowing – and therefore mortgages – even chancellor has insisted that to ensure economic stability, there is no alternative to her fears that stubbornly sluggish growth will lead to more difficult decisions at the autumn Budget, some voices on the left and centre-left are now begging to differ.
