Whenever there are big fiscal events, how the shadow chancellor responds is often very much a second order issue. The lobby hacks all troops out of the press gallery to start questioning the Treasury special advisers, leaving the Labour team feeling a bit unloved and irrelevant. In Autumn Statements past, the most interesting thing which occurred was John McDonnell chucking Chairman Mao’s little red book at George Osborne. Scenes.
Well, we’re not in Kansas anymore, kids. Rachel Reeves is very much one to watch whether you’re a political hack or a business leader. Every poll suggests that she will be the next chancellor and she believes that. She knows she commands respect and very much enjoys her high-status visibility. Even a recent embarrassment over plagiarism in her book The Women Who Made Modern Economics hasn’t dented her confidence.
Today was no different. Although Jeremy Hunt made a number of crowd-pleasing announcements including keeping the pensions triple lock, taking 2p off national insurance contributions and expanding 100 per cent expensing for businesses (which brought cheers from Tory backbenchers who have been agitating for tax cuts) – nothing really changes her overall narrative.
The economy is still in an absolute state and her now well-honed attack lines speak to an incontrovertible truth which people feel across the country.
We now live in a high-tax, low-growth economy which the Tories have presided over for 13 years. People feel poorer whether they are in the Red or Blue Wall or North of the border. The crippling cost of living crisis coupled with the rise in mortgages and rents has pushed people across the country to the limit.
Most people aren’t even going to notice a 2p cut in national insurance when stealth tax rises, including freezing the tax thresholds, have hit people so hard. As many prepare their January tax returns, it’s a shock to see how much more they are now paying.
Reeves has crafted a potent, damning critique of the Conservative record which plays into the pure rage people feel about paying more tax and getting so little for it.
Her accusations of the Government “pickpocketing” the public mirrors the language you hear out and about. You also hear it from Tory MPs. She also paints a vivid lurid picture of government waste from the insane Rwanda scheme to Covid fraud which saw Tory cronies enrich themselves to the embarrassment of HS2.
Add to this the Broken Britain narrative of overstretched crumbling public services which have been starved of funding and lag behind in terms of modern equipment and technology which would help them be more efficient.
In politics, very little actually cuts through to the public. Dry policy details send people to sleep. Economics is especially hard to communicate. Yet, Reeves can paint in primary colours with clear simple messaging which echoes the frustration of modern Britain whether you’re a plumber, a nurse or a CEO. It’s quite an achievement to have brought genuine emotion to opposition economics. And to be clear, it’s not her being emotional, she is channelling the howls of fury felt around the country.
She deserves great credit for this and has worked hard to reach out to businesses in particular. She’s always had a strong sense of where she thinks the public is on economics, which to some in Labour feels “right-wing” but she argues it is about being responsible and fair.
Her unerring commitment to fiscal responsibility is not just for Christmas, she believes in discipline whether that’s welfare or departmental spending. She is not going to have a damascene conversion to splashing the cash if she does become chancellor. It’s not an act. She intends to be an iron chancellor because she believes that’s how Labour wins and stays in power.
When she addressed the Parliamentary Labour Party on Monday evening she said that this election would be fought on Labour being the party of fiscal responsibility, business and helping working people people. Some on the left grumble this sounds all a bit blue collar Conservative but it’s working. The Tories’ trump card has always been the economy, and yet the latest polls (Redfield and Wilton) show that Labour is now more trusted than them in terms of building a better economy by 7 per cent.
The challenge Reeves faces is not getting to No 11. Every business leader expects and hopes her to be the next chancellor. It’s what she inherits and what she does.
There were no huge political bear traps in the Autumn Statement as they won’t work on her. It’s also hard to paint the darling of the City as a crazed marxist.
She welcomed many of the announcements and said that Labour had called for them. But what was revealed was the terrible state of the public finances. For all the illusionary talk of “headroom” and tax cuts, what should trouble team Reeves the most lay ominously in the Office for Budget Responsibility’s (OBR) small print – that higher inflation means the real value of departmental spending is £19.1m lower by 2027-28 than their March forecast. That means a potential ticking time bomb for public spending under a future Labour government and the spectre of more austerity. The OBR also reminds us that the UK is still on course for the biggest reduction in real living standards since Office for National Statistics’ records began in the 1950s.
What this Autumn Statement revealed is that the enemy for Reeves is not Hunt or even a new female chancellor parachuted in at the eleventh hour. She can wipe the floor with them. Her real nemesis is the reality of just how hard things will be.
Yes, there is an argument that not having mad people in charge will help. That having ministerial and policy stability will help business and investment. A proper industrial strategy with planning reform will help with growth and skills but this will take time. Stability and “securonmics” are also highly dependent on increasingly erratic geo-politics.
In the meantime, there is a pretty grim reality ahead for many people. Like the cab driver this week who told me about how he has no idea how he will get through Christmas. He was on hold to his internet company, who had just doubled his bill with no warning. His voice broke as he told me how he had sold treasured family items to the local pawn shop and asked me how could it be possible that he and his wife were struggling now more than they did 20 years ago when their kids were little. “We worked so hard then. We’re still working so hard. When does it get any easier for people like us?”
Away from the stats wars around the Autumn Statement and the OBR, that is the real question Reeves will have to answer and fast.