As Chancellor Rachel Reeves gears up for her first Budget on October 30, all eyes are on the tax hikes and spending cuts totalling £40 billion which nearly every newspaper in the land has been told are coming down the track.
But while policy choices—around welfare savings, tax rises, and employer contributions—dominate the headlines, it is the broader vision that will ultimately determine whether Reeves’ Budget is deemed a success.
Labour is now entering dangerous territory. The dire state of public finances is no shock, but the full weight of the challenge is hitting home. Reeves faces rising inflation, higher borrowing costs, and stagnant growth. The question isn’t just how she’ll navigate these immediate hurdles, but what kind of future she’s aiming for. So far, the signals are mixed. There’s a promise to avoid austerity and tax the wealthiest more heavily, but specifics are lacking.
The danger for Labour is that, without a clear vision, each decision could seem reactive and disconnected. For instance, raising National Insurance on employers has already drawn warnings from business groups, highlighting how growth and job creation could be undermined. This speaks to a larger issue: Labour hasn’t yet articulated how it plans to balance fiscal discipline with the growth and investment agenda it campaigned on.
Reeves’ fiscal rules, like covering day-to-day spending with tax revenue, are meant to project prudence but risk handcuffing the government’s ability to pursue ambitious growth plans. And the manifesto’s promise not to raise taxes on “working people” only deepens confusion—if employers bear more of the tax burden, how does that align with Labour’s growth priorities?
This lack of a coherent strategy points to deeper tensions in the Starmer government. They’re keen to move away from ‘austerity’ but haven’t yet defined their alternative. Simply plugging the fiscal gap with tax hikes won’t cut it. Labour needs to offer a clear, compelling vision for the country’s future, or it risks being seen as reactive, lurching from one fiscal necessity to the next.
The stakes for Reeves’ Budget are enormous. She’s not just tasked with balancing the books but shaping political narrative for the rest of Labour’s term in government. If she fails to tie her fiscal strategy to a broader vision for growth and fairness – and tell the country what they can expect in return for the challenges to come, the government risks getting bogged down in tactical battles. For example, tax rises might be fiscally necessary, but without a bigger plan, they’ll come off as panicked, not purposeful.
In the end though, it’s not the individual policy choices that will define Reeves’ success—it’s Labour’s ability to offer a hopeful and cohesive roadmap for the future. Without that, the government’s approach will feel aimless and leave them more vulnerable still to the challenges they’ve been trying to manage since coming to power.
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