The Chancellor insisted on Friday afternoon that “no issues were ever raised” during her time working at the bank, that she was “never questioned, never asked to pay back any expenses”. She added: “In the end, people are going to judge me on the job that I’m doing now as Chancellor of the Exchequer to grow the economy and put more money in the pockets of working people.”
As well as breaking her own fiscal rules (which she had already tweaked to try to keep), Reeves will have to announce painful cuts to departmental spending which will set up endless fights and grievances within Government. The leaked Office for Budget Responsibility forecast this week suggested that Reeves is running out of fiscal headroom to make those spending cuts the last word, and that she may have to raise money through more taxes.
She has not managed to do nearly as much parliamentary outreach as senior colleagues think she should have done by this point, and while she has her loyalists, Reeves remains a reasonably distant figure for many Labour MPs.
Rachel Reeves is in a hole - she has no choice but to raise taxes
Read MoreShe is happy to have a fight over planning reform, painting in primary colours a standoff between “bats and newts” and the people who need a home they can afford.
But even if a combination of missed (and self-imposed) fiscal rules, resentment from Government colleagues and questions about her pre-parliamentary career leave Reeves politically wounded, Starmer still doesn’t have a real reason to replace her as Chancellor. In fact, in many ways, he benefits from having a colleague who acts as a lightning rod for MPs’ angst about how the relatively new Labour Government is faring.
Politicians could do with accepting that they’ve got things wrong a bit more than they do, but changing course so early in a government would undermine overall trust in that administration far more than any claims about Reeves’s taxi bills in a previous job.
The Prime Minister should probably be grateful that it’s Reeves taking the heat for all this: replacing her would make his life far more uncomfortable.
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