According to Politco:
Rachel Reeves is preparing to face down the business leaders [today] who say her tax rises will cost jobs and endanger the growth on which Labour's plans rely.
The standoff will play out at the CBI conference. The CBI must be relieved to be near centre stage again. It seems Rachel Reeves made that happen. And what on earth is she talking about by saying there was no alternative to what she did?
The business gripe is easy to identify. Employers' national insurance hikes at the same time as increases in the minimum wage (one made sense, both do not) have created the hostile environment. Failure to tackle problems with business rates effectively has helped. And the fact that Reeves is doing nothing to bring down interest rates hardly helps her cause. Of course, businesses are unhappy. They don't want a recessionary environment, and that is what it sees Reeves is trying to create.
What is more, they know Reeves had a vast array of options available to her. I laid out thirty or more in the Taxing Wealth Report 2024. Not all of them would have appealed to the CBI, I am sure, but to pretend that Reeves had only one course of action she could take is only possible if you note three things.
First, Reeves was incompetent before the election when promising no increases in income tax, national insurance on employees, and VAT.
Second, she was also incompetent in fixing corporation tax in advance for a parliament.
Third, her reluctance to tax the returns from investments enjoyed by the wealthy means she has to pile the pressure on returns to labour.
Given these three things, she might think that she was left with no other choices but the ones she made. That, though, was to accept the fact that she had made mistakes and to then consider herself bound by them, which she apparently does.
Reeves had ample choices available to her to get the economy right. She chose not to take them. She chose to make things worse. She is now being criticised for the consequences of that. She has three choices.
She could admit her mistake.
She could change her mind, and ease some of the pressures on employers and so on employees.
She could also signal a new tax strategy aimed at making the wealthy contribute to society in an appropriate fashion.
But she won't do any of those things, and so she is stuck where she is; we are stuck we are, and Labour is a busted flush, already. It takes an extraordinary level of incompetence to get things so wrong so quickly. Well, that, combined with a total lack of political nouse, because you never realised political convictions were required of a Labour MP. Reeves suffers from both problems.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
There are links to this blog's glossary in the above post that explain technical terms used in it. Follow them for more explanations.
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
Richard,
Interesting comment about business rates.
Its a bit of thread drift I know but given what you have said about the difficulties with valuations what about replacing business rates with a tax on business leases? It would clearly need to include something to cover vacant land and land or property owned by a business
I am more concerned about the disadvantage for physical businesses rather than online ones.
“It would clearly need to include something to cover vacant land and land or property owned by a business”
We have this in the USA and it is called “Property Tax”. It is paid locally to the County and City.
A withering assessment which frankly she deserves and has nothing to do with her gender.
I admit, I never even thought about gender
She’s just another useless Chancellor to me
There are some that might think it gender based – you know how gender politics can be used these days?
‘Just another useless Chancellor’ – for sure.
Thank you and well said, Richard.
Over the week-end, Liam Halligan called her boss “naive and needy” with regard to sucking up to BlackRock and thought Starmer was getting his golden parachute ready.
Will Reeves be fired in the summer of 2026 or will Starmer decide they should hang together?
It will be interesting if the allegations of irregularity over the election of Streeting bear out and an election has to be held. Leanne Mohammed has lawyered up.
Streeting is looking for another seat.
Thank you, Richard.
If a by election has to be run and Streeting stands / has to stand there and loses…
We can live in hope
I think the new seat will be at the next general election. Someone will be bribed to give up a safe one.
So, “TINA” is back.
Good. We can deal with that one. Because the one thing our economy is NOT short of, is an alternative. In fact we have a surplus of them.
Alternative taxes, alternative interest rate policy, alternative redistributive policies, alternative green policies, alternative green investment, but above all, a totally credible alternative to “we can’t afford it”.
Of course, it will still involve “difficult choices”. The most difficult choice of all will be when TINA Reeves says, “Sorry, we CAN afford it”.
@RobertJ
Mrs Thatcher visited RAF Germany and BAOR when I was the Protocol Officer responsible for the arrangements. Her programme was classified, so I couldn’t think of a heading to put on the board. My Boss put “Tina”. No one worked it out.
🙂
@Hannah
I had an RAF medical sibling at Rheindalen then, my fiancee & I drove out to see them, in 1979, via Dover-Oostend ferry. Didn’t see Tina though. I grew up on RAF airfields.
I am tempted to feel sorry for Reeves (but have not given into this temptation).
Two things mitigate against her forming a clear view. Her background, which eusured she had a neoliberal outlook, and the informationally noisy environment that she inhabits. I have no doubt that like all of us she has the capacity to think/reflect etc. But if you are bombarded by info/data/political tat day in day out, where is the calm space needed for reflection? Bolt into this the Bliarite influence (corporations good, anything else bad – unless it is tokenism) and you get the result you get.
Is she waving or drowning? Time will tell. Do I feel sorry for her? Nope, she wanted this, she got it, she owns it.
I personally think that anybody who studied PPE at Oxford shouldn’t be allowed within a country mile of the Treasury, but perhaps that’s just me…
The Oxford PPE course must be abolished it only produces reckless chancers.
Strange when reading histories of the Atlee government there was no mention of “there is a black hole caused by funding the war and we can’t do anything”.
Rather, that government just got on with introducing positive legislation to benefit the UK population.
This Labour government appears to have sold its soul to neoliberalism.
And now she is blaming us (at the CBI) for not suggesting any alternative tax policies..
Some of us did, and she ignored us so don’t get hung up abvout it.
Sometimes you despair. The following is in the comments section of a story in the Financial Times. It got the most “likes”. Some of the criticism of Reeves is valid but the rest…….
“Labour are proving themselves to be completely clueless as to how wealth and incomes are generated. They seem to think there is a set amount of wealth in a society and all that needs to be decided is how it is distributed.
“They could not be further from the truth. Wealth is created in the private sector by entrepreneurs combining land , labour and capital to create output and without that, there are no jobs, no incomes, no taxes and no public sector.
If they make that activity uneconomic, it just won’t happen.
“It is quite incredible how clueless these people are. If only we had a Chancellor with a genuine economics background, maybe we would not be witnessing such incompetence.”
I have made a video on this topic today.
That description of capitalism is from the pre-neoliberal era. Capitalism is now financial capitalism and nothing like what that comment claims. They are peddling a fantasy.
Richard,
Her comments that there no alternatives recalled equally fatuous comments by Gordon Brown, “the end to Boom and Bust”…
Did you send her your Taxing Wealth report 2024?
Did she just ignore it?
Or is she in a Treasury bubble of her own making?
Who are her political advisers?
Its not looking good whatever.
A delightful gem from “The Independent’s Quote of the Day”:
“I just typed into Google ‘how to change the prime minister’ and it came back with ‘start a petition’; so that’s what I did”
Michael Westwood, pub landlord
🙂
Gaby Hinscliff is wading in to defend the Chancellor.
https://www.theguardian.com/commentisfree/2024/nov/26/online-cv-truthers-uk-chancellor-gordon-brown-george-osborne
Apparently her PPE degree at Oxford and time at the BoE OVERqualify her for the job as Chancellor, and all the criticism about her budget is gender based.
That comment alone tells me all I need to know about Ms Hinscliffe’s journalistic insight.
That is ridiculous
I resent the suggestion, too
I criticise Starmer just as strongly for letting this happen
I would criticise any Chancellor for what she has done
Interesting though, isn’t it, that the Guardian stenography team are being wheeled into to defend the Chancellor, and the arguments deployed by them, are not economic ones, but complaints of misogyny?
Are they beginning to feel the pressure? They should, because I’ve just come across the latest in the story about “the money question” and how public spending is financed.
Labour Minister Chris Bryant has solved the thorny issue of where government gets its money from.
Apparently, when HMG needs cash (for Storm Bert flood victims), it sends a minister onto Sky News to raise funds via a GoFundMe account.
https://x.com/SaulStaniforth/status/1860978517539774524
&
https://www.gofundme.com/f/p9zpr-rhondda-flood-fund (the GoFundMe page mentions Chris Bryant MP, a Welsh Sennedd member, and local councillors).
Is this the new economics, from the latest PPE syllabus? MCT – Modern Crowdfunding Theory?
I think we just fell down a rabbit hole.
Totally bizarre