Rachel Reeves’s budget contains many measures to make any social democrat cheer. Scrapping the two‑child benefit cap, putting up gambling taxes, freezing rail fares and implementing a mansion tax are not just sensible moves – they are long overdue. As is a “managed transition” for the North Sea that supports workers while pivoting to clean energy, without abruptly ditching oil and gas. The country will be a better, fairer place for these measures. They should also assuage backbench anger over self-inflicted damage by the chancellor’s proposed welfare cuts and secure Ms Reeves’s position – for now.
The dilemma at the heart of Ms Reeves’s fiscal strategy is that while individual policies may be progressive, the economic framework they sit inside is not. This is exposed by the Office for Budget Responsibility. Behind the signature policies lies a deeply conservative macro strategy. The budget will see £26bn in tax rises borne heavily by workers, falling investment, stagnant growth, flat wages and a fiscal debt rule met on a coin toss. The OBR warns that under Ms Reeves’s spending plans, unprotected services – councils, courts and police – will face Osborne-style cuts of 3.3% a year from 2029 to 2031 unless the Treasury finds £21bn extra. Her fiscal rule makes those cuts inevitable.
