2 weeks Ago By Andrew Johnson
The first Labour Budget in nearly 15 years was always going to be a big moment – and always going to be somewhat chaotic, as ministers continue to find their feet in Government and civil servants adjust to the political shift. Some ministers are still getting used to the very basics, such as juggling their work in Whitehall departments – a far bigger commitment than serving on the Opposition front bench – with their duties as a constituency MP. “It’s like going back to work after becoming a parent,” one minister admitted this week.
“You feel like you’re doing both of the jobs worse than before.” But even given the inevitable growing pains of a new administration, the run-up to the Budget was much less smooth than it might have been. Unforced errors During his trip to Samoa last week, Sir Keir Starmer mistakenly announced the creation of five new freeports – something the Chancellor in fact had no plans to do.
The error was put down the 12-hour time difference which allowed an erroneous message to go uncorrected for too long. Even after his return to the UK, internal communications barely improved. During a Q&A session following a speech on Monday, Sir Keir caught Whitehall officials unawares when he announced that the cap on bus fares would be increasing .
Read Next This isn't as bad as Truss's mini-Budget but Reeves is not out of the woods yet The plan had been to frame the policy as the Government maintaining the cap to keep fares low, albeit at £3 not the previous level of £2. But the Prime Minister’s decision to announce it before the press release was ready allowed opponents to badge the move as Labour hiking bus fares by 50 per cent, and thereby “punishing” workers. A Government source tried to explain the decision, telling i : “A bit of the policy had been leaked on Sunday so it was around.
He knew what the policy was, so he decided to answer the question directly when asked.” But others were less impressed – suggesting that the incident undermined a narrative that it was Sir Keir’s former chief of staff, Sue Gray , who was responsible for previous communications blunders inside Government. “It’s fairly evident by the fact that nothing has improved with No 10 comms that Sue had nothing to do with it,” a Labour insider said.
Budget backlash When it came, the Budget was seismic. Rachel Reeves ripped up her pre-election promises to stick to eye-wateringly tight spending plans, claiming that the Conservatives had left a much worse legacy than she had expected – leaving her with no choice but to raise taxes by £40bn , mostly in the form of higher levies on business , and to increase borrowing by tens of billions of pounds. The Tories were quick to accuse Labour ministers of breaking their word and putting unacceptable burdens on firms, while left-leaning campaigners and independent economists warned that the uplift in state spending announced would not be enough to prevent future pressures on public services.
Within Labour, however, the mood was cautiously optimistic. An ally of the Prime Minister admitted it would be “tough” for the public sector to meet new efficiency targets, but added: “This is much better than we would have got with Tories – and politics is a choice between better and worse.” The Chancellor was greeted with a rare standing ovation at a meeting of Labour MPs on Wednesday evening.
One witness said the gathering was more buoyant than they had ever seen, telling i : “Rachel knows how to talk to the Labour Party in a way Keir does not.” Another MP said that any negativity was largely the fault of the press, complaining: “It could have been focused on record investment in the NHS. It could have been on the biggest increase in the national minimum wage and carer’s allowance in history.
There so many things the headline could have been instead of £40bn in tax rises.” Taxes on ‘working people’ But the same backbencher admitted that the party had made a rod for its own back with a manifesto promise not to raise taxes on “working people” – as economists point out, increasing employers’ national insurance contributions will feed through to workers in the form of lower wages over time. The MP said: “I’ve got to admit, if I’m being honest, the phraseology around working people, instead of putting a tax on work, could have been clearer.
” A different MP warned that Ms Reeves could end up having to perform a U-turn on the decision to restrict inheritance tax relief for farmland , saying: “If we are going to have a story every day about farms then perhaps there is a way to tweak it to make it more palatable.” But they dismissed claims of dishonesty in the election campaign, insisting that broken promises are part of Westminster reality: “You have to hate the game as much as the player, that’s politics.” Read Next 'Farage tribute act' Jenrick vs 'abrasive' Badenoch - what next for the Tories? The biggest concern of all, for a Government which describes economic growth as the most important of its five “missions”, is that growth is forecast to remain anaemic over the coming years and the Budget will have only a marginal impact.
One Starmer loyalist described the projections as “a bit low”, while another MP commented: “I think where we’ve got to be really careful is, if the pain is felt immediately but the gain is felt in five years’ time then we’re going to lose people before that gain finally comes. Voters are not rational, and they’re not forgiving.” Ms Reeves privately acknowledges that there is more work to do, and will set out plans to ramp up Government investment at a speech later this month.
A source close to the Chancellor told i: “Ultimately, do we want these growth figures to be higher? Yes we do. But the Budget is not the last word about growth. We are not ‘growth and done’ now – we want it to be higher, there are other levers we need to pull.
” The Tory response to the Budget has been punchy, with a focus on opposing the changes to inheritance tax which the party has dubbed a “family farms tax”, but without a permanent leader in place the Conservatives have struggled to set out a coherent alternative vision for the long term. Tory leadership That changes on Saturday when either Kemi Badenoch or Robert Jenrick will win the race to be Leader of the Opposition, a job often dubbed the worst in politics. Even those closest to the two candidates insist they have no idea what the result will be: the only head-to-head poll of Tory members, which showed an easy win for Mrs Badenoch, was carried out through an unscientific online panel rather than via a professional polling firm.
One Labour MP, asked which leader they would prefer to face, replied: “I don’t think it matters” – adding that the contest was similar to Labour’s in 2015, “but with two Jeremy Corbyns rather than one”. Another said that the Conservatives had to learn the lessons that Labour did after its bruising election defeat in 2019, joking that the Tory response to losing power was: “The public don’t like porridge. Let’s give them a double serving of porridge.
” But another election definitely is preoccupying Labour insiders – the race for the White House. A minister told i allies of Donald Trump had privately signalled that he will work constructively with Sir Keir if re-elected, despite his anger about Labour staffers campaigning for Kamala Harris. “I think they’re going to be very sensible about everything,” the minister said.
An MP suggested Labour could even benefit from a Trump victory, claiming it would be a “cautionary tale” about the dangers of populism. Others are less sanguine – fearing that the main British winner from a Republican win would be Reform UK, given the ties between Mr Trump and Nigel Farage. A Conservative MP said: “The Trump angle will be a challenging one for the Government when it comes to Nigel Farage.
It’s likely that Farage will seek to exploit it.”.
