Rachel Reeves delivered a significant speech ahead of this month’s Budget, which can be distilled down to a simple message: “It’s not my fault.”
Traditionally, chancellors have either taken credit for economic prosperity or have argued that their tough decisions will yield future benefits.
However, it’s rare, if not unprecedented, for a chancellor to deliver a major speech three weeks before the Budget, especially one at 8 a.m., only to shift the blame onto others. In a move highlighting her political misjudgment, Reeves made it clear: “Don’t blame me. The responsibility lies elsewhere.”
In her address, Reeves pointed fingers at no less than 15 different sources and individuals for the economic troubles facing the country. Her list included Liz Truss, Kwasi Kwarteng, Rishi Sunak with his “£22 billion black hole,” Donald Trump’s tariffs, supply chain disruptions, global borrowing levels, Vladimir Putin’s aggression, and even Keir Starmer and Pat McFadden for their welfare reform demands. She also blamed unreliable trains, slow broadband, former Chancellor George Osborne and David Cameron’s austerity measures, the COVID-19 pandemic, and Brexit.
Noticeably absent from her list of culprits was herself, as Reeves seemed to avoid any admission of her own role in the fiscal challenges.
Conveniently, there was one person who Rachel Reeves didn’t seem to feel bore any responsibility for the nation’s fiscal implosion: herself.
Over the past couple of weeks, there has been a flurry of speculation over the various measures Reeves will announce in the Budget later this month, and which manifesto pledges she will have to break in order to balance the books.
I’d thought this was simple political expectation management, so that, when income tax, national insurance and VAT rates remain untouched, Britain would breathe a deep sigh of relief and overlook her other stealth tax rises.
Chancellor Rachel Reeves delivered a speech ahead of the upcoming Budget this morning
But according to Labour insiders, there is a more basic – and troubling – rationale for the blizzard of pre-announcements.
‘The reality is Rachel is boxed in,’ one minister told me. ‘She genuinely doesn’t know what to do. She knows she’s going to have to raise taxes. She knows when she does she will have broken her promise to the voters. And she still hasn’t made the final decision on the best way to do that, whilst minimising the political damage.’
Which is what lay at the heart of today’s quite bizarre statement. When asked to provide any specifics of what hardworking families can expect, Reeves tetchily refused to answer, stating her inquisitors would have to wait until November 26.
So this was nothing more than a pre-emptive attempt to find someone – anyone – to blame for the dire state of the UK finances who doesn’t currently hold the title Chancellor of the Exchequer.
And it’s not going to work. Rachel Reeves is about to run out of road. A year ago, she stood up at the CBI and announced: ‘Public services now need to live within their means because I’m really clear, I’m not coming back with more borrowing or more taxes.’
Since that statement, Reeves has tried everything to stop herself becoming a hostage to her own fortune. There was the dramatic volte face in January, when she suddenly ditched her mantra about the Tories driving the economy of a cliff, and began a desperate attempt to try to talk up Britain plc. ‘Economic growth is the number one mission of this government,’ she proclaimed. At which point, growth promptly collapsed.
Then there was the attempt to try to pretend all the problems facing the country had been successfully solved, which would allow for screeching hand-brake turns on winter fuel and disability cuts.
‘We have fixed the foundations,’ she triumphantly declared. And then watched in impotent horror as the bond markets went into spasm, and the Office for Budget Responsibility (OBR) produced a series of doom-laden forecasts, which made further tax hikes inevitable.
During the question and answer session after her speech, Reeves’ ‘ducked and dived and obfuscated’, says Dan Hodges
Hence today’s latest exercise in denial and deceit. Taxes were going to have to rise, she conceded. But that was nothing to do with her. There was no way she could have foreseen piling £40billion of new taxes on business in last year’s Budget would stifle growth. Or that failing to secure welfare savings would lead to an increase in borrowing and debt.
The most telling moment of her address came not in the speech itself but in the question-and-answer session that followed, as she ducked and dived and obfuscated.
Given her previous commitments not to raise taxes on working people, did she still believe it was important for politicians to tell the truth? ‘I think it’s important for people to be honest,’ she replied hesitantly.
Rachel Reeves is not being honest. Her words are there in black and white: ‘I’m not coming back with more borrowing or more taxes.’
But she’s going to. And when she does, the Chancellor will have nowhere to hide. She pledged growth. And she has failed to deliver growth.
She pledged to fix the foundations of the British economy. And the nation is now teetering on the brink of bankruptcy.
She promised no more borrowing or tax rises. And in three weeks’ time, more borrowing and tax rises are what she will demand.
I still don’t believe Reeves will end up breaking her election pledges. The political damage that will result from her breaking her commitment to the CBI is already going to be immense. But were she to tear up her manifesto by raising income tax or VAT then that would see Labour exiled from power for a generation.
And even Reeves is not that politically short-sighted. Today’s speech had one purpose. To try and let her wash her hands of the fresh hardship that is about to be inflicted upon Britain.
But she can’t. This is an economic mess of her own making. And when she stands up again in three weeks’ time, she is going to have to own it.
