The political fortunes of Keir Starmer and Rachel Reeves are intertwined. Aides say if one goes, the other is likely to follow.
That’s why, in the wake of the budget, the Conservatives have attempted to focus their response on the Chancellor’s personal ethics, and accused Reeves of lying about the reasoning behind the record-breaking increase.
And that’s why, in response, Starmer has chosen to fight personally. In a speech on Monday, he will try to draw a line under the controversy and focus on the government’s macroeconomic plan.
Writing for the Guardian ahead of that speech, the Prime Minister argues: “At last week’s Budget, we made the right choice for Britain, cutting energy costs with a £150 discount on bills, protecting the NHS and tackling the child poverty crisis by removing the two-child limit.”
Seeking to buy political breathing space for himself and his chancellor, he will argue on Monday that his program – which includes welfare reform and deregulation – is a “big, bold long-term plan” and not a “set of quick fixes”.
The Prime Minister has reason to focus on her long-term economic goals and away from the immediate aftermath of the Budget, given whether the Chancellor has lied about why she is raising taxes.
The Conservatives have accused Reeves of using low productivity forecasts from the Office for Budget Responsibility (OBR) as a cover for tax increases.
While the OBR lowered its productivity forecasts, it also upgraded its forecasts for wages and tax receipts, leaving the Chancellor with a surplus rather than a deficit.
Conservative leader Kemi Badenoch has also accused the Chancellor’s colleagues of trying to manipulate financial markets by briefing on 14 November that Reeves had decided to abandon plans to raise income tax rates due to better-than-expected news from the OBR.
In fact, Reeves and his team have known about the OBR’s more rosy outlook for some time – even when he gave a rare pre-Budget speech on 4 November warning that the lower productivity outlook would hit wages and tax receipts.
That timeline was spelled out last week in a letter to the Treasury select committee from OBR chief Richard Hughes.
The letter was meant to be an improvement on a Treasury briefing on November 14, when officials attempted to calm investors spooked by the overnight news that the Chancellor had abandoned his plans to raise income tax rates.
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After weeks of stories about the OBR – including Reeves publicly questioning the timing of its productivity review and criticizing it for not “scoring” pro-growth government policies – this flurry of briefings has particularly irked the independent forecaster.
Reeves argued Sunday that he needs to raise the tax to increase his buffer against unexpected costs to protect his fiscal rules and keep government borrowing costs down. Her colleagues say she would have been in a much more comfortable position without the decline in productivity.
But Reeves and Starmer know that the more challenging long-term problem is whether the public has made up its mind about how the government is managing the economy. Polling for More in Common after the Budget shows that only 16% of voters think the Chancellor is doing a good job – about the same as previously thought.
The Prime Minister hopes voters will eventually feel the impact of higher public spending and business deregulation. On Monday, he will argue that his plan should only be evaluated at the end of Parliament.
But voters are desperate for improvements in their daily lives, so they may feel that time is a luxury they don’t have.
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