Rachel Reeves trolled the left in yesterday's fiscal statement. She unveiled what is obviously going to be her new mantra. Her claim, repeated several times, was that “we can only do what we can afford”.
I am quite sure Reeves knew very well that what she was saying was based on a claim made by Lord Keynes, the architect of post-war thinking, and the effective creator of post-war prosperity as a result. He said in a BBC broadcast in 1942 that “we can afford anything we can do”. Reeves' new mantra is, of course, the exact opposite of what Keynes said.
Is it likely that Reeves chose to so explicitly and so directly reject Keynes by chance? I don't think so. I think it was absolutely deliberate. As I noted in The National last night:
Keynes wanted to empower the country by letting it do the best that was possible, knowing that this would generate enough wealth to pay for what was achieved. Reeves, in contrast, wants to use her role to belittle the country by denying it, and all of us, the chance to do those things of which we are capable.
One of these is a noble aspiration. The other is a dismal one. Reeves has made clear where she stands today. She has made the dismal choice.
To again quote my article in The National:
She is a Chancellor in the Tory tradition of George Osborne, Philip Hammond and even Rishi Sunak. Just when the country most needed a new vision, she is going to offer us nothing of the sort.
It was, however worse than that, for two reasons.
First, we got a reprise from Reeves of her 2013 claim that Labour will be tougher on those on social security than the Tories are.
Second, she went on to prove her bias by removing the winter fuel payment from millions of pensioners who rely on it and cannot claim pension benefit because the conditions for doing so are so strict. Doing so, she he made clear that she is on the side of the wealthy, and is determined that those less well-off should pay for the austerity she very obviously plans to impose.
As I concluded in my National article:
This was a deeply divisive, utterly unjustifiable, mean-hearted and economically illiterate performance by Reeves that, alongside remaining high interest rates from the Bank of England, makes the likelihood of a recession in the UK quite high. And there is absolutely no need for that. It will all be her fault if it happens.
Let me, then, some thoughts on where we, and some specific groups, are now.
Suppose you were one of those economists who signed letters before the election saying that Reeves was offering the best solutions for the UK. How are you feeling now?
And how are those Labour MPs sitting behind Reeves feeling now when they have to tell pensioners that they must suffer quite unnecessarily because of the fiscal position we are in, but the wealthy must not pay a penny more?
Then suppose, as some Labour MPs must do, that you both understood Keynes and what he meant by saying that we can afford whatever it is that we can do and that Reeves is now explicitly refusing to do what is possible for our country. How would that make you feel?
My guess is that all three groups will feel sickened, disheartened, demotivated and worried by what Reeves is going and her explicit trolling of the left, via Keynes. All of these groups must know that she is setting out to deliver economic failure. By copying Osborne she guarantees nothing less.
Is that, they will be asking, what Labour is for? Is this why they fought against modern monetary theory and the possibility it presents? Is Reeves as good as it gets, they must wonder? And the answers must, in all cases be ‘no'.
Reeves is creating an economic nightmare for Starmer. The question is, how long is it before Starmer realises and sacks her? Unless he does it quickly he is a one-term prime minister, which with his majority would be quite an achievement, but totally deserved. A public betrayed by another neoliberal failure will not be forgiving.
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If you are right, I have no reason to presume you are not, then I suspect Starmer will resurrect the culture wars and surrender to emotional messaging of nationalism and the like to try and hold onto power.
He is repeating the Tory playbook of the last 5 years in a slightly different guise after getting such a big mandate.
Modern Britain is full of waste and this mandate is a huge wasted opportunity.
I agree with your view, but must point out that his mandate is “built on sand”, as it is based on the electoral support of only just a shade over 20 per cent of the eligible electorate.
They have been on borrowed time since the day after the election.
It is amazing how quickly a government’s moral authority can melt away. Just look at the previous one.
I agree, it’s important not to see vote share and number of elected MPs as synonymous, given the FPTP system. It’s not true that Labour have a significant mandate, they’re down by 25 percent compared to 2019. The reason for the parliamentary picture is Reform splitting the Tory vote, allow Labour candidates to get past the post. The landslide was a systemic quirk, not a resounding endorsement. As you say 80 percent of people don’t want Labour in power.
Thank you.
The EU is well aware of this, too, hence not wanting to waste time with the UK.
I keep reading that the combined Tory and Reform vote outnumbers those who voted for Labour without acknowledging that the combined progressive vote of Labour, Lib Dems and Greens is significantly higher.
Reeves’ performance yesterday was the pure performative politics of theatre – nothing else.
Then I had to watch Helia Ebrahimi (should her first name be ‘Helium’ – she talks nothing but hot air but her glasses make her look intelligent for sure) and her ‘analysis’.
Then, everywhere I went afterwards were TV hacks recounting the same dishonest story.
What a day for myth-making.
What a day to watch the truth buried.
What a day to see imagination stymied.
What a day to confirm similar days ahead.
I’d be more crestfallen had I not been sceptical beforehand, but feeling that your worries have been confirmed is small beer in the greater scheme of things.
being kind to reeves- I’m probably the only one here- hers was a political speech rather than an economist’s
She is the Chancellor
And she claims to be an economist
That does not wash
Thank you and well said, both.
I have met her ladyship a few times, going back to the credit crunch. She wrote for what Mervyn King called the Sun of business journalism, City AM. You are being too kind.
🙂
I agree, but it was more than myth-making. It was confirming and doubling-down on a hostile narrative that has been running since Thatcher’s time: the anti-Keynesian dogma that Professor Murphy has identified, designed (successfully) to persuade people that there must be money in the government’s coffers before it can spend it, and that only the private sector (turbo-charged by the “free” market and without regulation) can supply that money. We know who profits from that, and it is not people on benefits or pensioners, nor indeed any ordinary working person reliant on a wage. Labour’s natural supporters, now ditched and fobbed off with a flag limply hanging behind Starmer et al when they make their pronouncements.
Building on what others here (and elsewhere) have said, it seems entirely feasible to suggest Starmer gifted Clacton to Farage by deliberately undermining the left-wing candidate (who in normal times might have been expected to win with his support) in return for Farage/Tice creating lots of candidates (some imaginary, it seems) splitting the Tory vote so Labour could win the election and take a turn in power. During these happy days they will of course be doing as much looting as possible. After five years of this, Labour should have disenchanted the electorate sufficiently for Reform to be a shoe-in. Turn and turn about. None of this has anything whatsoever to do with political affiliations whatsoever. It’s just about the pursuit of power.
Anyway, what I’m saying is Starmer is, in all probability, already reconciled to the idea of a single term. That’s as much as he’s being allowed and he’s gratefully accepting it. He should be rich enough by then not to need a second term anyway so he’ll be happy to turn over the reigns of power to Reform.
Five years is an eternity in politics though. I notice the genuine left are regrouping, predictably enough, around Corbyn. I imagine in five years there’ll be a genuine left-wing alternative for people to vote for.
It remains to be seen how many of us will have survived to see it.
‘ Reeves is creating an economic nightmare for Starmer. The question is, how long is it before Starmer realises and sacks her?’’
I think he realises already and this was the plan all along. They don’t care if they last one term, the whole point is to give the establishment everything they want. They’re then happy to lose and hand power back to the Tories. This is the uniparty’s forever ‘good cop, bad cop’ politics.
Well I think most of us who read this blog expected as much, I certainly did.
As I have said before Starmer’s Labour party will lay the ground for Farage and Fascism I just did not think they would start with such speed and determination.
It would appear that our forecast of 2 year period of grace for Labour will be much shorter.
With Reeves’s illiterate statement and intent to trash the economy and Streeting waiting in the wings to gut the NHS I would be surprised if it’s a year before the roof falls in.
Four years struggling with high interest rates massive NHS waiting lists virtually zero house building, councils going bankrupt and a rempant Tory MSM biting their arses every day I will bet heavily against them serving a full five year term and they will achieve next to nothing.
Enter Farage.
It’s terrifying, time to plan to move abroad for me I’m lucky enough to have a European passport.