Nigel Farage says he’s never seen “anyone so hopelessly out of their depth”. Labour members agree with him, choosing Reeves as their least favourite figure in Cabinet. This morning, the Daily Mail and the socialist Morning Star led with near-identical front pages blaming the Chancellor for job losses. She is the politician people love to hate.
Most damningly, she has failed to grasp the nettle on tax rises. The basic unavoidable truth is that she needs to raise a big-ticket tax item: income tax, VAT or employee national insurance. It’s the only way to secure enough money to give her proper breathing space on her fiscal rule, which aims for income to meet expenditure on current spending.
Today’s Spending Review will provide another opportunity for her detractors to attack her. Government department budgets will rise by 2.3 per cent a year, but health and defence require more cash, which leaves her making painful cuts elsewhere. These are straitened times, defined by economic stagnation and geopolitical volatility, and the Whitehall spending settlement she has reached reflects that.
square KITTY DONALDSON Rachel Reeves just sent a pointed message to her critics
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But Reeves did make one big decision. In a key area of economic policy, she held her ground, rejected Treasury orthodoxy, and forced through a significant change. It was a major call, with potentially generational consequences, which has been largely forgotten or ignored in the months which followed.
This was a brave and principled decision. It was a decision which deserves the highest form of praise. If we do not differentiate between these two things, the Chancellor – whichever party they come from – will always be tempted to scrap investment in order to make the sums add up.
Today, we saw the result of that decision. A £113bn increase in capital spending. Some £39bn on affordable homes. Billions to transport, with a particular focus on rail, tram and bus projects outside of London. And billions on energy, with £14.2bn for a Sizewell C nuclear power plant and £13.2bn for the Warm Homes Plan, which includes domestic heat pumps and energy efficiency measures.
Of course, Reeves has tried to make the most of this, using the weeks leading up to the Spending Review to promote these measures. But in truth, she will struggle to secure political advantage from them. People feel cuts to council services very quickly but they are much slower to notice big capital projects, which often take years before the shovels are even in the ground. Investment spending has a time-lag which does not suit Westminster’s five-year election cycle.
But in 20 years, someone will be on a better train journey, or enjoying cheaper energy, or benefiting from more affordable mortgage payments, as a result of what happened today. This will be because of decisions that Reeves took in her autumn Budget and the actions she took this afternoon. She is not getting credit for it now and she is not likely to get credit for it in two decades’ time either. But she deserves it nonetheless.
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