Reeves lets the crisis go to waste by uttering no national rallying cry

Rachel Reeves has changed her mind. Since becoming Chancellor of the Exchequer she has come to realise the British state cannot compensate people for every misfortune they may suffer as they go through life.

There is no money, as an earlier Treasury minister confided on leaving office in 2010. But this is a lesson which successive Governments have been reluctant to proclaim.

Within a few sentences of starting her statement yesterday in the Commons on the economic impact of the war in the Middle East, Reeves declared that the Government will be sticking to “our ironclad fiscal rules”.

By making this promise, she sought to reassure the bond market. Her officials will have impressed on her how vital it is to do so.

As the Shadow Chancellor, Mel Stride, pointed out in his reply, Britain now has the highest borrowing costs in any major advanced economy, with gilt yields higher than those of Greece and Morocco.

Our public finances are so rickety that we are each year paying over £100 billion in interest on our debt. We would be in extreme peril if we tried to run an even larger deficit, and with the word “ironclad” Reeves indicated that she knows this.

If she had gone on to take the House and the wider public into her confidence, she would deserve credit for honesty, and might have wrested back the political initiative.

For no political party is yet being quite straight with the voters about this. Everywhere one finds a disinclination to express inconvenient truths, a sense that discretion is the better part of valour.

Reeves could have seized the initiative, and thrown the Conservatives off balance, by announcing that it is quite wrong to go on with the public finances in so shaky a condition that we have nothing to fall back on in an emergency.

Once the Government demonstrated both by its words and its actions that it recognises this, our borrowing costs would quite quickly come down.

A virtuous circle could begin, and a start could be made on tax reform, including the removal of various cliff edges which act as a disincentive to earn more, to expand a small business, or indeed to look for a job at all.

Reeves instead tried to justify the change in her position by attacking the Conservatives:

“As we respond to this crisis, we must learn from the mistakes of the past.

“The previous Government pushed up borrowing, interest rates, inflation and mortgage costs with an unfunded, untargeted package of support under Liz Truss that gave support to the most wealthiest of households.”

One could tell from the faces of Labour MPs (see the photograph above) as they listened to Reeves how depressing they found her statement. The Government feels compelled to make gestures of help: it has offered £53 million to be distributed among low-income households which depend on heating oil.

Gavin Robinson (DUP, Belfast East) pointed out that Northern Ireland’s share of this sum would amount to £34 per household, and that there is no data to target the support.

Simon Hoare (Con, North Dorset) observed that Dorset Council’s share of the money is £474,000, “which really will not touch the sides”.

We found ourselves invited by the Chancellor to enter a world of futile gestures, where the Government pretends to help, without actually being able to do anything that would make a noticeable difference.

Reeves’s predecessor as Chancellor, Sir Jeremy Hunt (Con, Godalming and Ash), said:

“Could I gently ask the Chancellor to be less partisan at a time of crisis? If she brings before the House difficult measures that are right for the country, she will have the support of the whole House, but if she is partisan, she will not.”

This was advice Reeves was unable to follow. She uttered no national rallying cry about uniting round difficult measures.

The Father of the House, Sir Edward Leigh (Con, Gainsborough), suggested:

“Is there not a sensible, middle-of-the-way approach here? We should by all means proceed with green energy—such as offshore wind, in which we lead the world, in the North Sea off the Lincolnshire coast—but we should also keep an open mind about new extraction from the North Sea.”

Reeves could not agree to keep an open mind on this, for at Energy questions, held just before her statement, Ed Miliband, Secretary of State for Energy Security and Net Zero, had once again shown that his mind remains firmly closed to the possibility of new extraction from the North Sea.

Miliband suggests by his haughty demeanour that he considers himself cleverer and better informed than anyone else. This could be true, but does not, unfortunately, mean he has better judgement.

Tony Blair used to convince Middle England that he must be sound because at frequent intervals he annoyed and distressed Labour MPs. Sir Keir Starmer, Reeves and Miliband instead go out of their way to appease Labour MPs, with the result that they look narrow and partisan at the very moment when the nation might unite, as Hunt said, round difficult measures.