By instinct and conviction, Rachel Reeves is a traditionally social democratic, centre-left Labour chancellor. When she delivers her budget next week, though, those qualities will be hard to discern. The reason for that is simple but powerful. She has become hemmed in on every side by avoidably tight commitments on taxation, spending and borrowing. Above all, however, she is hemmed in by Labour politics.
It did not have to be this way. Reeves would have had a freer fiscal hand if she and Labour had not ruled out increasing all the three main personal taxes at the 2024 election – a choice the former Conservative minister David Willetts described this week as “catastrophic”. Reeves might also have won herself more elbow room, albeit at some political cost, if the new government had moved very decisively to say that, having studied the figures, the triple-tax pledge was in fact unsustainable.
