Keir Starmer has humiliated Rachel Reeves
What is the Chancellor if not the Prime Minister’s economic adviser? We now know that she no longer performs that function, after the PM’s brutal move to bring economic policy into his office, rather than her’s.
After little more than a full year in office, Keir Starmer’s government appears to be circling the drain. Support has dripped away month after month, leaving Labour languishing in the polls and seemingly adrift amid a sea of policy errors and political missteps.
They entered government with two main objectives – to stabilise the public finances and oversee a return to robust economic growth – and they have failed in both of these pursuits.
Persistent inflation (fuelled by taxing the productive part of the economy to increase pay in the less productive parts) means that the “black hole” apparently discovered by Rachel Reeves on her first day in the Treasury has pretty much doubled in size.
As for economic growth, the little that can be identified is largely down to a splurge in government spending, which is hardly a sustainable state of affairs. Things are so bad that tax increases in this autumn’s Budget will probably be double the size of those announced last year.
Against this backdrop, the prime minister reportedly spent his summer holiday reflecting on the organisational structure of Downing Street and the capacity of the civil service to ‘deliver’ his agenda. It appears he has concluded that he no longer needs – or trusts – Rachel Reeves to lead on economic policy.
New appointments are worrying
The sweeping changes at Number Ten, announced yesterday, are being presented as a sensible evolution in the next phase of a government. Indeed, Starmer released a video in which he declared the arrival of the “second phase” of his government.
In reality the changes are more revealing, speaking to a recognition that the “first phase” has not gone well yet pointing to a doubling-down of the flawed thinking that has characterised and undermined the first year of this government.
Recalibrating the centre of economic decision-making to the heart of Number Ten (in effect, sidelining the Chancellor) has not reassured the markets while the arrival of Minouche Shafik as the PM’s new economic brain is worrying; she said in 2023 that “those with comfortable pension pots must be expected to pay more to the common good.” She’ll fit right in.
Meanwhile, whichever “phase” Starmer thinks he’s in, voters are increasingly clear that they’ve lost faith in his government, as our latest polling reveals today. It will take more than some shiny new hires to reverse that trend, and the Budget – set to be a painful one – is hurtling towards us.
It will be delivered by a Chancellor who has suffered a ruthless and very public downgrade to her status.