Watch: Reeves fights back against critics ‘talking rubbish’
It’s not just Angela Rayner who finds herself on the defensive; Rachel Reeves has come out fighting – claiming many of her critics are talking rubbish. Who could she be talking about?
Imagine returning from your summer break to find that your boss has poached your deputy and hired a brace of advisers to advise him on your job. That’s the situation Rachel Reeves found herself in – though Downing Street insists that she and Keir Starmer agreed on the plan.
The mini-reshuffle of people and roles that most people have never heard of and will never think about was in fact hugely consequential.
In appointing Darren Jones, until recently the Chancellor’s No 2, to a powerful position inside No 10, Starmer is admitting that the machine has not been delivering. He needs Jones to drive through his agenda across departments. Then, in appointing his own personal chief economics adviser he’s admitting a number of things.
First, that No 10 hasn’t been across the economic agenda – politically and in terms of policy. Secondly, he’s saying that the Chancellor is not his chief economic adviser. Thirdly, his choice of guru is revealing; Minouche Shafik is no bland centrist. Fresh from an embarrassing stint running a US university – about which the less said the better – she’s now got the ear of the Prime Minister.
Supporters say she brings “clout and heft” – but what will she do with it? She’s on the record calling for “people with comfortable pension pots to pay more towards the common good” – and she worked hand-in-glove with tax-maniac Torsten Bell on a report that called for wealth taxes and higher inheritance tax. So, she’ll fit right in.
The Budget approaches…slowly
Now Rachel Reeves, having had her wings clipped, has confirmed that her second Budget will be on November 26th. That’s quite late, about as late as it can be, but as Ian King quipped yesterday – “bad numbers take longer to add up than good ones.”
Reeves said the Budget would be about reform and renewal, generating growth that people can feel. She also reiterated that her fiscal rules, that day-to-day government costs will be paid for by tax income, rather than borrowing by 2029-30 and that she’ll get debt falling as a share of national income by the end of this parliament are “non-negotiable.”
That’s good to hear, God knows the bond markets need to hear it again and again, but it means that in the absence of stellar growth forecasts spending cuts or tax rises are absolutely essential – you could argue, “non-negotiable”.
We know how hard this government will find it to get spending cuts through their MPs – they tried it once and they were humiliated – so tax rises, of course, are coming.
Expectations range from around £12bn to an eye-watering £50bn. Yesterday, the Chancellor specifically rejected that upper figure and she slapped the economics body responsible for coming up with it – the National Institute of Economic and Social Research. She said that this institute has got their numbers wrong more than once in recent years – and she’d better hope they’ve got them wrong now.
She broadened her defence, saying that a lot of people trying to preempt her decisions “are talking rubbish.”
Can’t think who she’s referring to.
Could it be the British Chamber of Commerce who yesterday warned the economy is stuck in first gear as it downgraded its forecasts for growth next year? Or perhaps she meant us here at CityAM. Or Deutsche Bank. Or the Institute of Directors. Or Capital Economics. Or GOldman Sachs. Or ING. Or Bloomberg. Or Rathbones. Or Oxford Economics. Or Andy Haldane. Or AJ Bell and IG. Or Quilter. Or Blick Rothenberg. Or the Institute of Fiscal Studies.
Reeves insists the economy isn’t broken
She went on to say that a lot of what her critics are saying is “irresponsible” – which is a bit rich coming from the Chancellor that promised never to repeat a Budget like last year’s but who now has to find twice the amount of money as she snatched from British businesses this time last year.
Reeves did at least concede yesterday that the economy is “not working well enough for working people” – but she said it isn’t broken. Just a little rickety, perhaps.
Can she fix it? Well, we hope so, but what’s needed most of all is a reduction in spending to reassure investors and a reduction in the tax burden to stimulate real growth. I don’t see how she could do either of these things even if she wanted to, but the clock is now counting down to the Budget and at that point we’ll see who’s really been “talking rubbish.”