Rachel Reeves' Budget was a damp squib, delivering austerity by stealth. There was no vision, and no investment. There was just fear of the City of London. In this video, I ask why the Chancellor has surrendered economic power to finance and consider what a politics of care and investment would look like instead.
This is the audio version:
This is the transcript:
The budget has happened. Rachel Reeves has spoken. The world has reacted, and it feels like it was a terrible damp squib.
This was a hollow budget, a budget that really delivered austerity; a budget in which the City won because nothing was done to harm it, and she should have done things to tackle wealth and the abuses that go on there, and as a consequence, people lost.
This was a budget above all else without vision. It was a budget made up of excuses. And that's worth talking about because if this is where we are economically, we are in deep trouble.
Let's be clear. Rachel Reeves gave the City everything it demanded. She flew ideas out from the Treasury as if they were spaghetti trying to find a wall to stick to, and nothing did stick. Everything she suggested was thrown back at her. The City said, "We won't tolerate that." And so she didn't do it. Anything of any sort that might have delivered something radical was basically rejected, not by the public, and not by Labour MPs or by parliament. It was rejected by the powers that be in the City of London, and that was enough for Rachel Reeves to sit timidly in her office and deliver a non-entity of a budget as a consequence.
She did nothing to add value to our economy.
She did not announce any new investment that will make a significant change on this country.
She did impose austerity by stealth, but she denies it.
We do know there will actually be cuts in government spending in some areas, like education and justice, and in local authorities with massive impacts for some groups in society. For example, everybody around special educational needs now knows that it will be in even deeper crisis in the years to come than it is already.
And this is the real sting in the tail: she raised taxes to pay for her own failure. And people are really angry about that. People are counting this all up and saying, "If I'm paying more, what am I getting?" And the answer is, nothing. And you can't blame them for actually saying, "In that case, why are we going to put up with more of this?" Because why would you? Why would you pay so much for an empty vision? And it's a reasonable question that people are asking.
People want decisions that are based upon the fact that the wealthy should pay more. They know that that is where the capacity to pay tax exists in the UK, and they know they don't have it.
They know that the government needs to do more, and they want it to do more, and they know that Britain is stuck in decline.
But as a consequence, they also know something else, which is that Britain has no economic plan and Rachel Reeves clearly hasn't got one, and they can even rumble why.
They realise that she has no plan because she's living in fear of finance. And why is she doing that? Well, she's accepting the antisocial neoliberal claim that taxes fund spending and that borrowing must be undertaken to balance the budget. She's doing that even though she must know better. I give her credit for the fact that she must know better and that she's doing it nonetheless. She's deliberately cutting jobs, she's cutting incomes, and she's cutting economic capacity because, although she knows the truth, she's succumbing to the lie.
She's promoting the household analogy that says that the government must be run like her mother ran her household budget, even though if she has any sense at all and has acquired any knowledge as a consequence of her past career in banking, which she likes to talk about, then she must know that this is wrong.
She must also know, as a result, that she does not need to borrow. She must know that the full funding rule that says, "We must borrow if there is a deficit," is just something made up in 1998. It's not real. There is no such rule. It is no more a rule than her fiscal rule is a rule. It's just made up. She must know that government can always fund itself. She must know it has. After all, how else does she think that the government funded itself after the 2008 financial crisis and during the COVID crisis? So she must know that her choice of austerity is ideological and not required.
So why is she making that choice? Well, the only answer can be that she is living in fear of the City. She's living in fear of the fact that they might not give her the funds they require, when in fact she doesn't need their funds. She can fund herself, and she doesn't need to go out of her way to attract funds from them because if they decide not to play ball with her, she can just borrow from the Bank of England.
And nor does she need to subsidise our commercial banks by paying risk-free interest to them on their Central Bank Reserve accounts. She could literally hold them to ransom rather than have them hold her to ransom. But she won't. And as a consequence, she's taxing the poor to subsidise the rich.
She's leaving the real problems untouched as a result. She isn't taxing the excessive monopoly-driven or rentier-driven rent extraction monopoly profits, which are leaving households in debt and in poverty because they're paying too much for their utilities. They're paying too much for their phones. They're paying too much for their train travel. They're paying too much for so much, including everything that they buy from their supermarkets, because although people claim that these aren't monopolists, of course, they are.
Tesco has more than a quarter of the UK retail food sales in this country. That means it and the other supermarkets become oligopolists and they make exceptional profits as a result, even if the margins are small.
She's allowing speculative finance to make too much.
And she is permitting tax abuse. We know that £14 billion a year is not being paid by small companies, and did we hear of any measures in the budget to tackle this, which would've meant she could have been much more generous in other areas, even if she had to balance the budget as she thinks, quite inappropriately? No, we heard, not a word. Her ambition is to raise around £2 billion a year, a target so pitifully small it is ridiculous.
She is not taking on the issues.
She's not challenging the abuse within our economy, and there are hollow growth claims coming from her.
They're hollow because care was ignored, education was ignored, the green transition was ignored, public infrastructure was ignored, and innovation was ignored. You cannot grow without attending to all the needs in those areas as well, and so when growth fails, as it will, because she isn't considering things in the round, as she should, she will have to cut again.
We're a death spiral. Cuts are followed by reduced capacity, are followed by slower growth, are followed by more cuts, and this is not a strategy, it is a managed decline on behalf of wealth. She's delivering compliance with the wishes of the City; she's not delivering transformation, or purpose, or a future.
She still, instead, claims there is no money when she's in charge of creating it. You couldn't get a greater paradox, or a greater indication of failure, than that. The old lie is rolled out time and time again to restrict public services, to blame people, and to protect wealth.
The question now becomes, "Who governs Britain?" Is she governing really, or has she surrendered the economy to the interests of antisocial neoliberal capitalism in the form of the City of London? It seems she has, and Labour's sole job is now to enforce their priorities.
We could do better. We could have public investment on the basis of a national bank, which I have promoted in my Alternative Budget, to which there will be a link down below.
She could tax wealth, as I also proposed in that Alternative Budget, and she isn't going to do so.
She could end the subsidies to banks, which are costing maybe £20 billion a year at present, and which she does not need to provide.
She could rebuild public services as productive assets.
And she could create a fiscal rule that focuses upon full employment and meeting our climate obligations.
She could, in other words, treat people and planet as objectives and not as constraints.
She could, in other words, be a courageous politician.
She could use the power of government to deliver benefits for everyone.
She could use democracy to literally manage the economy.
We could have a better future, but without a vision, not only is Rachel Reeves not courageous, she is the exact opposite. We have a cowardly politician in charge of the Treasury, and we're all paying a price for that.
Do you agree? I believe we need a chancellor with imagination and courage, with a plan that serves the people. Somebody who will manage a politics of care, of investment of hope. But what do you think? Do you think this is what we need, or do you think Rachel Reeves is doing just fine? Or do you even think that we should, in fact, be cutting government even more?
Let us know. There's a poll down below.
Poll
Loading ...My Alternative Budget is available here.
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Please accept my apologies for this being late this morning. I overslept. My only excuses are a) it’s been one heck of a week b) I am human after all, and c) I feel better for it.
High time MPs refused to let Reeves proceed. There are probably quite a number of bills they could reject, and carry on rejecting, until Reeves goes and is replaced by someone with morals and courage. Unfortunately, I get the impression there aren’t enough MPs with the necessary understanding, and willingness to abandon the LINO line in order to force the issue. (Perhaps they could even go on strike, if they were determined to undermine what Starmer/Reeves are trying to do to the country.) But no, they just want to carry on braying mindlessly in the chamber (for their own satisfaction, not that of their constituents).
But wealth was taxed in this budget. Mansion tax and increased taxes on investment income. Those working were taxed harder with the freeze on thresholds and the changes to salary sacrifice. Benefits were increased with the removal of the two child cap. Fair enough you want to overthrow the economic order but i think dressing that up in budget detail just makes the message cloudy.
Oh come on. That is pathetic pleading.
Pleading? Who is pleading? It is factual. Why is everything so confrontational?
You are pleading on behalf of wealth. You are the person doing the offensive confrontation on behalf of privilege. Think about that, I suggest.
Living in fear of the city, or securing her own comfortable future?
The rule is, never ascribe to malice what you can put down to stupidity? Is this the exception that proves the rule?
While my watchword is Independence for Scotland, and as we are attached to Westminster for the moment, I very much doubt if there is a politician, or more importantly a political party in that place, with the courage, or vision, to implement the policies Richard has promoted. And if England votes Reform U.K at the next General Election, then the chances disappear completely.
Reeves’ lack of understanding about how the economy actually functions is not the only proof of her being being out of her depth in her role as Chancellor of the Exchequer. She’s also taken it upon herself to tell the Scots that there is no way that she will permit a referendum on Scottish Independence: https://bellacaledonia.org.uk/2025/11/29/opportunism-hypocrisy-and-imperial-disdain/
Well if she hadn’t already ‘cooked her own goose’ with the alleged Budget, she now fancies her chances to dictate to the Scots that the the so-called Union is a de facto prison from which there is no right of secession. If anything is guaranteed to get the Scots riled it’s a lecture by an incmetent English politician on Scotland effectively being an English colony with no rights of self-determination. The 2016 Scottish and Welsh elections are getting more interesting by the minute.
Everything to agree with.
On reflection, I think Rachel needs to wrap herself up in her warmest coat, go into one of London’s lovely parks, look around, then sit down and think about what she plans to do with the rest of her wild and precious life.
Is she really living her best life? I’m not joking, by the way.
Has she got any diversion from what she is doing? She needs to switch off.
Richard has his birding and nature to divert him. And his coffee.
I have my jazz. And my coffee. And the summer day, as you might gather from earlier.
I have other diversions, too.
I build model railway, most especially narrow gauge locos pretty much from scratch – mechanisms and all.`
And railways history is both a fascination and social anthropology – reminding me that systems empower people to achieve.
Rachel Reeves’ leisure time presents a rather interesting contrast to the day job. She’s a serious chess player apparently. Positional play? Thinking three moves ahead? Mmmm.
Then there’s the wild swimming, which feels like the perfect metaphor for British politics: cold, unpredictable, and requiring more bravery – or is it foolhardiness – than most people realise.
And, of course, there’s the legendary karaoke years – Beyoncé renditions delivered with the gusto of someone fully prepared to “run the world,” albeit into the slightly sticky carpet of a Westminster pub.
I would take the chess story with a decided pinch of salt. Like a lot of her CV, it might not stand up to too much investigation.
You often share bird photo’s and talk about your birding
You did report on a footplate trip on the Vale of Rheidol but can we have some model railway pictures – if only to make me jealous of your model building skills
Maybe….
You need to stick that quote I took from one of this weeks postings about high interest rates being simply a transfer of wealth that all the scholars from the Abrahamic faiths recognised and stick it somewhere conspicuous on the site as thats whats happening
Noted
What has changed in the budget? Not very much at all. The best the chancellor can say is that she has got away with it for now. The horses that were running scared before the budget are less scared today. The backbenchers have shut up.
The press keeps reporting increased taxes and increased spending but hardly anything change now or next year. Look at Table 4.2 in the Red Book for what changes and when. There are some increased spending plans in 2026/7 – for example the abolition of the two child cap which was announced now but does not actually happen until April 2026. Some small 2p increases on rates of income tax rates on dividends and rent and savings but not until 2026/7 and 2027/8. Further freezes on personal allowances but not until 2029/30 and 2030/31, by which time we will have had another general election so the promises could easily by changed or abandoned. Changes to salary sacrifices for pensions but only in April 2029. Tiny increases in tax on about 1% of dwellings but not until April 2028. If you can afford to run and maintain a £5m house you can afford £7500 per year. Mileage tax for electric vehicles (but why not other vehicles) but not until April 2028. But fuel duty changes are deferred again next year for something like the 16th year in a row.
No big bold decisions. No real vision for the future, just small nips and tucks and lots of decisions put off until tomorrow.
Much to agree with.
I feel she has let the original principles of the Labour Party down badly.
If she doesn’t feel the imposter syndrome, she should. I’m sure she works hard, etc., but, fundamentally, she is out of her depth and that is continuously demonstrated. She has no vision, is entirely blindsided by neoliberal dogma but, arguably, worst of all she appears not to even have the awareness that she could call on people who could help her deliver a vision, generate her oft-stated aim of growing the economy and to do so in the interests of society at large. As the phrase goes: ‘there’s none so blind as those who will not see’.
Not only does she seem blindsided by neoliberal dogma, she actually appears to be an acolyte. Seemingly, she is convinced that capital inflows, financial services, the rentier economy, etc., is what drives productivity, economic growth, value (to the country), etc.
In my role, I deal with banks, (so-called) investors, etc….and government. What I can say, is that my overwhelming impression is that banks are very process-driven and risk averse, (so-called) investors might take slightly more risk but both expect to extract (relatively-speaking) enormous profits and neither are innovate, creative nor have wider societal interests at heart and, most importantly, they are not wealth creators but simply wealth extractors. Reeves seems beholden to the neoliberal trickle-down dogma and, arguably, even in thrall to it believing that this unlocks growth, creates value, increases productivity, etc. Whereas, if she had any vision whatsoever she would realise the government could directly stimulate the economy, create growth by using its money-creating powers without introducing middle-men financiers who simply extort significant financial gain that, ultimately, gets picked-up by the tax-paying public.
Frankly, if she had any self-awareness, she would resign.
Glad you had a lie-in.
After dealing with the amount of mendacity you had to deal with mid-week, I’m not surprised, for mendacity it is.
I agree with others here that Reeves herself is not an intelligent person and can be manipulated like other light-weights like Starmer by lobbyists and market sleeper agents posing as ‘political advisors’. I’m sorry but ignorance of the law is no defence. And that includes the the laws surrounding sovereignty and sovereign powers.
To have a load of people in charge of us who do not believe in their sovereign power and effectively cede it to another power base – wealth ?! How bad can it get?
The technical arguments about fiscal issues apart – my view is that once again the fact that we are not a democracy has been reified. And as such, we – the people – are all entitled to think about self defence.
Let me try to bring it home to you all. This morning, I got a letter through the post about making a claim for any dodgy car finance I might have had – no claim, no fee! In one sense if the financial sector is being made to pay – that is good. Even better if some end up in jail, as they should when caught red-handed. Even, even better, how about some decent regulation eh?
But no, what you get is the financial sector making money out of putting illegality right. Justice as a way of making a profit. For all we know, some of these hawkers are owned and financed by the very same scumbags who robbed us in the first place! You’ll get yer money back – for a fee. Can you hear chubby hands clapping some where? You should.
And presiding over this – and much worse – are ‘elected officials’ – a ‘Prime’ Minister, a ‘Chancellor’ and a minister of Justice to name but a few. Public servants in the service of private finance put there by us in an elective system of oligarchy.
Life must be a wonderful groundhog day for the rich in this realm, because its win, win, win everyday for them, and lose, lose lose for the rest. Until what? Hmmm?
Thanks
I got an email from my local Labour MP extolling the virtues of the budget.
It’s going to rebuild the economy,increase investment in the country and public services and no return to austerity.
It’s not just the Chancellor who is deluded.
I sent a lengthy reply debunking her claims and asking her to look at MMT but it will fall on deaf ears as did a previous email that I sent about Rachel’s first. Budget.
Promoting the humane act of ending the Child Cap Benefit conveniently forgets this MP voting for the cuts in the first Welfare Bill.
Thanks
“She flew ideas out from the Treasury as if they were spaghetti trying to find a wall to stick to”
Has she become a member of the Pastafarianism* and is now worshipping the deity known as the “Flying Spaghetti Monster”???
It seems Reeves has!
*https://en.wikipedia.org/wiki/Flying_Spaghetti_Monster
🙂
Memories come to mind of the’Mystery Battered Pudding Hurler’ of an earlier era. The Telegoons circa 1968. Dennis Bloodnock, Gripping Thynne, Ned Seagoon, and Eccles, of course.
🙂
Never mind, all is not lost.
We have F*r*g* to look forward to and the sh*t will really hit the fan – if we survive LINO that is (and that’s not certain).
A story came out yesterday saying Rachel Reeves was told by the OBR back in September that there was no ‘black hole’ in the UK finances. Who knew.
When I heard the budget the first thing that came into my head was an old Monty Python sketch which paraphrased into my head as:
Rachel Reeves, Rachel Reeves, riding through the glen,
Rachel Reeves, Rachel Reeves, with her Labour Men,
Stole from the Poor, gave to the Rich,
Silly b*tch, Silly b*tch,
Rachel Reeves
Apologies for the facetious nature of my post, Richard, but it was the only way I express my anger at what she did. I’m retiring soon, but feel sorry for my younger colleagues at work. Some are already talking about living abroad.
I don’t know how those Labour MPs waving their papers and mooing their support can live with themselves.
What a sorry state of affairs. Let’s hope your good fight will eventually make a difference.
I try every day to point people here and explain why we don’t need to live in country in decline.
So glad you had a good rest – you need to take care of yourself.
Bernie, l am a big supporter of Richard’s work and whilst I largely agree with what you have written, I feel very uncomfortable with the language used in the Monty Python sketch. I am no fan of Rachel Reeves, far from it, but to openly call her a bitch I find offensive. I think we can rise above the derogatory language of Reform.
I wondered whether to post that.
If I got that wrong, I apologise.
And that’s why I put the * in, as I realised it was from an earlier age – no sexist comment intended. It was never intended to offend, so please accept my sincerest apologies, but I’m now at the end of my tether with politicians.
The anger I’ve received from other people was a lot stronger.
Peace and love to all on this blog
Bernie and Richard, apologies for my delayed reply. Your apologies appreciated and accepted, thank-you.
Thank you
One feature of Reeves’ budgets is just how much is done on the hoof, as if there was no forward thinking. In this budget, we know that thanks to the freezing of Income Tax personal allowances (even without the extension beyond the next election) someone on the New State Pension will be receiving more than the Personal Allowance from 6th April 2027 onwards. With a wave of her hand in an interview Reeves says we will arrange it so that no-one whose only income is the State Pension pays income tax.
But then Budget documents published by the Treasury included a commitment to “ease the administrative burden for pensioners whose sole income is the basic or new state pension”, which would apply only to those who did not receive the second state pension or any other uplifts. So someone could be on the old Basic State Pension and have a small amount of additional S2P, SERPS or even Graduated Pension, not enough to reach the level of the New State Pension in 2027 and afterwards but still be liable for income tax. This is Reeves thoughtlessly creating a two-tier system for pensioners.
Agreed
I’m afraid it doesn’t matter if Reeves is replaced as Chancellor. The post will be filled by another incompetent who will meekly follow the present Labour Party policy, whatever that is at the time.
It would appear that the budget has put the final nail in the coffin of my small business. The business rates revaluation means I go from not having to pay rates to a figure of just under 6K after all the reliefs in the first year, rising to over 7.5k after 3 years.
I know that’s peanuts to some people, but I can’t magic that money out of thin air in this economic climate.