IT looked as if Rachel Reeves had taken drama lessons to put on a show of sufficient mock anger in the Commons today. She clearly wanted to blame the Tories for what she was announcing. But nothing could hide the truth that we all already knew that there was a budget hole left of £20 billion left by the Tories. Her anger was about something that was old news to the whole country.
For someone who made repeated claims that she would always tell the truth about the state of the countries’ finances, she made a poor show of doing so. Even the figures she announced did not add up however you sorted them.
So, what did Reeves say when she got over her initial posturing? There were a few core messages, as far as I could tell.
The key points from Rachel Reeves's speech
The first was that she has agreed to settle pay disputes in England, all of which were largely resolved in Scotland and Wales long ago. She did not acknowledge that fact, of course.
Second, she announced penal austerity, mainly in English budgets, that will undoubtedly significantly reduce the rate of government investment in the economy, and dramatically slow the rate of growth in the UK economy as a whole. Roads, hospitals and railways suffer most as a result, but the impact will be widespread.
Third, there was no hint of new taxes on the incomes of the wealthy. They were, in fact, specifically ruled out. But almost in the same breath she announced that the winter fuel allowance of millions of pensioners will be removed. Anyone not on pension credits and some other benefits will lose out. Millions will do so as a result.
What we learned
In that one announcement, Reeves made clear what her priorities are. When it comes to investment, she would rather shovel money at the City of London than have the Government actually meet need by spending itself. And when it comes to sacrifices demanded, they will come from the least well-off, not the wealthiest. And this is from what claims to be a Labour government.
But in truth, this government is nothing of that sort. Labour built the post-war prosperity of the UK on the basis of the teachings of John Maynard Keynes, a Cambridge professor of economics who taught during the Second World War that after it, “we can afford anything we can do”. Reeves revealed her new mantra today. It is “we can only do what we can afford”, which is the exact opposite of what Keynes said.
Keynes wanted to empower the country by letting it do the best that was possible, knowing that this would generate enough wealth to pay for what was achieved. Reeves wants to use her role to belittle the country by denying it, and all of us, the chance to do those things of which we are capable, which is a dismal aspiration.
Reeves made clear where she stands today. She is a Chancellor in the Tory tradition of George Osborne (below), Philip Hammond and even Rishi Sunak. Just when the country most needed a new vision, she is going to offer us nothing of the sort.
But worst of all, when we needed a Chancellor dedicated to addressing the inequality that riddles our country she has already signalled that she is on the side of the wealthy, and is determined that those less well-off should pay for the austerity she will impose.
This was a deeply divisive, utterly unjustifiable, mean-hearted and economically illiterate performance by Reeves that, alongside remaining high interest rates from the Bank of England, makes the likelihood of a recession in the UK quite high. And there is absolutely no need for that. It will all be her fault if it happens.
