Rachel Reeves’ first Budget looks bold, and risky.
The Chancellor will next Wednesday, October 30, unveil a string of tax rises, billions of pounds of cuts to some public spending, and tens of billions of investment in infrastructure projects funded by more borrowing after loosening her debt fiscal rule, which has sparked fears of higher mortgage rates.
She is mooted to want to raise some £40 billion through tax rises, many of which will hit London hard, and spending cuts to tackle the “£22 billion black hole” in the public finances which she claims she inherited from the Tories, which they deny, and to invest billions more in the new Government’s priorities such as fixing the NHS with waiting lists of more than seven million.
So the Budget is going to be a big fiscal event economically, and the politics may be even bigger, and this is from a Government just months into office.
Gordon Brown as Chancellor hiked National Insurance by 1p in the pound in 2002 to pour more money into the NHS.
But this was his sixth Budget.
Ms Reeves is reported to be planning a hike on National Insurance on employers’ pension contributions, a move which Mr Brown’s old Cabinet colleague Lord Blunkett has warned against.
At the time, Mr Brown insisted that not a penny more would go to the NHS until reforms were underway so less money was wasted.
Twenty-two years later, that same debate still rages over NHS funding and productivity.
New Health Secretary Wes Streeting talks a good game on reform, and appears serious about it.
But it took years for the Blair Government to find out how government works, or possibly more significantly does not work.
Sir Keir Starmer, unlike many Prime Ministers, had actually run something before taking office, the Crown Prosecution Service.
But his start in No10 has been rocked by a series of controversies including the ousting of his chief-of-staff Sue Gray who was replaced by his political guru Morgan McSweeney.
Sir Keir says: “I believe in running towards problems.
“If you know what the problem is, what the challenge is, every business knows this, every family knows it, run towards it and fix it.”
But Labour has yet to show it can walk the walk in Government, let alone run which does not mean that the PM’s approach is wrong, but just that it may be more riskier than a more cautious approach.
His Government will have some wind in its sails, including that Britain looks a far more stable country now for investment than under the Tories and compared to other turmoil-hit countries around the globe.
Strikes by train drivers and junior doctors have been called off, after agreements were reached with the unions, as the Government seeks to get the UK moving economically and NHS waiting lists cut.
But the new Government is inexperienced and another economic shock, or unexpected impacts from their tax and spend reforms, could easily derail its masterplan.
Then, the Tories will be able to argue it’s the same old Labour - hike taxes, borrow more, spend more and strike deals with the unions, with the taxpayer footing the bill, to stop walk-outs.
If Sir Keir and Ms Reeves’ big gamble pays off a second term awaits, if it doesn’t everything will be to play for at the next general election.
