Is Rachel Reeves’s claim that, since arriving at the Treasury just three weeks ago, she has discovered large, unfunded liabilities in the public finances a transparent political manoeuvre, so that she can blame tax rises and spending cuts on the Tories? Well, yes. But that doesn’t mean she’s wrong.
It’s true that most economists – including me – pointed out during the election campaign that the then government’s plans for tax and spending did not add up, and that public service expenditure plans in particular were, in the words of the chair of the Office for Budget Responsibility (OBR), a work of fiction. And that therefore Labour’s commitment to (broadly) stick to those plans, while ruling out broad-based tax increases, was at best a hostage to fortune.
