Majority of Labour MPs oppose Reeves’ fiscal rules
Two thirds of Labour MPs oppose Rachel Reeves’ fiscal rules, and twenty percent would prefer tax rises over spending cuts.
Polling by Survation, shared with The Times, showed that 64 per cent of Labour MPs said Reeves’ rules inhibit ministers’ abilities to meet their objectives, including: raising living standards, improving public services, and combatting climate change.
This follows reports that Reeves has asked unprotected government department to brace for substantial budget cuts as part of the upcoming spending review.
The government’s fiscal bind has been poorly-received by many department heads, with reports that ministers are insisting they speak directly to Reeves to untangle concerns that the spending review will see them facing reduced funding in the years ahead.
With Labour MPs flexing their muscles on issues such as welfare cuts, the deputy PM, Angela Rayner, has also sparked debate with the party by putting her name to memo calling for a range of fresh tax hikes.
In terms of public opinion, YouGov found that 59 percent of Labour voters from the 2024 general election would prefer increasing taxes or borrowing over cuts.
However, increased borrowing would see the small headroom set aside by the Treasury – just £9.9bn – depleted.
How to spend it
On the 11th June, following the announcement of the spending review, Reeves will also unveil major changes to the government’s investment rules, The Times reported, suggesting that more spending on capital projects across different English regions is likely to be the centrepiece.
Red Wall Labour MPs are particularly concerned about Reeves’ fiscal rules as Nigel Farage’s Reform eyes their seats.
Labour MP Josh Simons said infrastructure projects aimed at building and repairing roads in and around his Makerfield constituency are crucial for maintaining Labour support in the North.
Otherwise, Simons warned “rage” and “anger” could follow.
In reference to building a road to Wigan in order to cut down on congestion, Simons said: “when you look at the history of why it was not delivered, and decisions were made not to deliver it, mostly made down in Whitehall, mostly based on land values, which always punish Northern towns.”