Is Reeves doomed?

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Starmer’s initial response yesterday to the question about whether Rachel Reeves will remain Chancellor for the whole term of his government was to say that she enjoyed his full confidence, a line which he repeated several times before, eventually, one of his spokespersons gave the requested confirmation. As promises go, it’s about as trustworthy as his manifesto for the last election, and the Chancellor could be forgiven for feeling a bit like a football manager who knows that the club’s owner only has to declare his complete confidence twice more before the inevitable sacking.

She may be able to defy the laws of political gravity for a while longer, but four years is a long time, and in any event defying the laws of basic arithmetic will inevitably prove to be beyond her capability. Her claim that she could repair and sustain public services, not increase taxes or borrowing, and at the same time reduce the government deficit (which is what her entirely arbitrary but ‘non-negotiable’ fiscal rules say must happen) always depended on the assumption that the UK economy would grow such that tax revenue increased without changing tax rates. And not just grow, but grow in a way which is unprecedented in recent history and for which there is no basis in policy to justify. Reality and wishful thinking aren’t the same thing, no matter how hard the spin doctors might try to convince us otherwise. Something will have to give, and the easiest thing to change, politically, is those fiscal rules. There’s nothing strange in that – they invariably change when the Chancellor changes; and even Starmer will eventually work out that that is the cost he will have to pay.

The question is about how much damage is done in the meantime, since it is becoming increasingly clear that her response will be to stick by the rules and cut spending instead. She will claim – indeed, the government is already claiming with its target of a 5% spending reduction – that this will be achieved by cutting out ‘waste’. But defining ‘waste’ isn’t as obvious as it sounds: for most politicians, ‘waste’ is any spending with which they disagree. Whether school breakfast clubs, keeping libraries and theatres open, or even implementing reduced speed limits are wasteful or not depends on your political perspective. About the only thing we can say with certainty is that an imposed budget cut – whether of 5% or any higher figure which Reeves will announce in the next month or two – is rarely effective at reducing what the average layman would call waste, and invariably ends up with cuts to services. Calling it ‘fiscal prudence’ rather than austerity is a bit like calling a hungry tiger a big cat. Big cat sounds more friendly, but it will still be happy to eat you.