You can’t blame politics. Rachel Reeves was as expected, but still shocking black hole We had to respect the capacity of the Chancellor of the Exchequer, who plays the central role in British finances.
Conservative Party £20 billion not reduced by 4p National Insurance cuts, but they can be criticised because they had no effect on the election result. Nor can Mr Reeves and Sir Keir Starmer be blamed for promising not to reverse the National Insurance cuts they knew the country could not afford. Because they thought it was a Tory tax cheat.
It is clear that voters do not like tax increases, so we must also respect the calculations of the commitments of the two main political parties not to increase income tax, national insurance or VAT. represent 63% from income.
One cannot help but marvel at the barbaric political decision of Conservative ministers to leave costly decisions in their letterboxes and max out their credit cards, knowing that someone else will end up footing the bill. The more issues that are left in the hands of the Labour Party, the harder it will be for them to succeed.
While Reeves may have been shocked by the financial details and his anger at the Conservative Party’s mismanagement was entirely justified, his actions were largely pre-planned. The overall financial situation was known before the election. This was all part of a political strategy to temper public expectations, hold the Conservative Party to account and instil patience in his own MPs. He also probably knew from the start about the tax increases he hinted were unnecessary during the campaign and which would be announced in October.
So certainly those of us obsessed with the machinations of modern politics can appreciate a game well played.
But Reeves’ highly artistic comments highlighted how politics is failing and the country is failing. Your savings plan This includes scrapping a £1bn plan to cap adult social care costs. This is one of Britain’s longest-running political problems. The field is severely underfunded. Staff pay is low, hospitals struggle to discharge patients because of staff shortages, and people who need institutional care because of illnesses such as dementia are forced to sell their homes.
At least it continues a long tradition. Chronology of evasion In 1997, Tony Blair declared: “I [our children] “I grew up in a country where the only way pensioners could access long-term care was to sell their home.” The Royal Commission stated that “doing nothing is not an option”, when in fact it was.
Since then, until 2010, a series of Labour reviews and measures have been abandoned or weakened because of cost. Talks between the two main parties collapsed when the Conservatives saw an opportunity to mount an electoral attack on what they called the death tax. When the Conservative Party came to power, it put forward the Dilnot proposal to cap the costs of long-term care. A version of the proposal has since been revived and postponed.
Prime Minister Boris Johnson introduced a levy to cover the costs. Chancellor Liz Truss abolished it as part of her tax-cutting policy. Promised reforms were then cleverly delayed until after the 2024 election. Partisan politics and concerns about short-term funding led to its 27-year failure.
Reeves decided that further delays would have little political cost because he had other pressing priorities, such as spending billions of dollars to resolve or avoid public sector pay disputes. There is no blaming politics. Instead, the Labour Party is promising a broader national care strategy. Let us see what happens. But prudent measures that postpone long-term problems are often the source of later crises. Consider a decade in which no new nuclear power stations were built.
It would be foolish to judge Reeves harshly based on this incident. The mess he inherited is real.and she Other cutsSpecific measures were taken, such as limiting the winter fuel subsidy for baby boomers to only the poorest pensioners.
He still has several fiscal options to choose from, including raising capital gains tax, cutting pension savings allowances, tightening inheritance tax and raising the cap on national insurance contributions for higher earners. The danger lies in denying obvious fiscal measures and Tax provisions for non-residents — by undermining the UK’s attractiveness to investors. This is the potential cost of an impeccable political call not to reverse National Insurance cuts. In the short term, it would have been wiser to resist the Conservatives’ attack on tax increases.
Reeves will argue that his approach is a genuine long-term approach, postponing onerous commitments until finances are stable. His plan depends on securing further growth and reforming public services. He may be lucky. In Wes Streeting, the health secretary, and Liz Kendall, the work and pensions secretary, Labour has two passionate reformers to tackle the rising costs of the NHS and social care. However, it is still too early to wait for results. GPs have already threatened to strike over funding.
Without funds, it is difficult to break the vicious circle of short-term decision-making. The fear is that even with big tax increases, unless public finances improve quickly, Labour will have too many urgent spending demands to respond to beyond simply putting out fires.
With any luck, Reeves will enjoy an economic tailwind. However, however good a political strategist he may be, he cannot keep up with the economy forever. While the new administration should not be blamed for a disastrous decision, it was a worrying omen. If growth and reforms fail to live up to Labour’s ambitions, this week’s surge in short-termism will be just the first step. However, we cannot blame politics just yet.
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