Rachel Reeves is raising your taxes. That is the glaring conclusion we can all draw from this morning’s bizarre pre-Budget speech inside Downing Street. Along we were invited to No. 9, at the crack of dawn, for a speech at least a week in the making.
In a trail of the speech released at midnight, we were told Ms Reeves would finally address mounting speculation about what she will do in three weeks’ time, alongside an implicit implication that her last Budget failed to rescue Britain’s failing economy. After the first Budget, Ms Reeves claimed she had “fixed the foundations” and would not be coming back for more eye-watering taxes. Today we heard the new truth she wants voters to buy – that while she failed to stabilise the economy last year, it was not her fault.
We were back to a performance by Rachel ‘not me guv’ Reeves, a Chancellor who refuses to take responsibility for anything that happens on her watch.
Global headwinds are responsible for borrowing costs going up; inflation is still “sticky” from the Tories’ time in power; austerity ruined the economy’ Brexit was “rushed and ill-conceived”; the pandemic left Britain broke. Reeves insisted this was “not about relitigating old choices” by previous governments, despite spending a good 10 minutes doing just that.
She completely passed the buck for all the current bad economic news, conveniently ignoring her own tax and spend decisions, refusal to tackle the surging welfare bill, tying firms up in red tape with the employment rights bill, and the economic instability caused by questions about her own future in the job.
The Chancellor all but-confirmed that tax rises are coming. In the Q&A session with journalists afterwards, she repeatedly refused to re-commit to Labour’s manifesto pledges not to raise income tax, VAT or national insurance.
Asked about the importance of keeping political promises, Ms Reeves delivered the most worrying answer of all: “I think it is important that people are honest, and I think everyone can see that this year has thrown many more challenges our way.
“It would be possible to cut capital spending, change the fiscal rules, make the numbers superficially add up. But that wouldn’t be the right thing for our country so I have to respond to the world as it is rather than the world I might want there to be.”
She talks about challenges thrown Britain’s way, and of course Donald Trump, Vladimir Putin and others have done their level best to rock HMS UK.
But she was explicitly warned about this at the last budget. The phrase we keep hearing – ‘fiscal headroom’ – is the buffer used by chancellors to shield Britain against international shocks.
Ms Reeves chose a pitiful £10 billion buffer last year, and was told that would be too little. Unfortunately the woman who spent 5 minutes interning for the Bank of England two decades ago believes she knew best – and now we’re all paying the price.
The Chancellor warned that everyone will “have to contribute” to the effort of restoring Britain’s finances, and “each must do our bit”.
Many voters will be thinking that Rachel Reeves should contribute a bit more to that national effort, and quit in favour of someone better suited to managing the economy.
