Labor Chancellor Rachel Reeves: ‘Big bang tax, borrowing and spending risks backfiring’

Rachel Reeves’s first budget looks bold and risky.

Next Wednesday, October 30, the Chancellor will announce a raft of tax rises, billions of pounds of cuts to some public spending and tens of billions in investment in infrastructure projects, financed by increased borrowing after the easing of her debt-ridden fiscal rule, which has raised concerns. higher mortgage rates.

She is expected to want to raise around £40bn through tax rises, many of which will hit London hard, as well as spending cuts to combat what she says is a “£22bn black hole” in public finances. she inherited from Tori. they deny it, and invest billions more in the new government’s priorities, such as fixing NHS waiting lists of more than seven million people.

So the budget will be a big financial undertaking from an economic point of view, and the policies could be even bigger, and this from a government that comes to power in just a few months.

Gordon Brown, while Chancellor, increased National Insurance by 1p in the pound in 2002 to pump more money into the NHS.

But this was his sixth budget.

Ms Reeves is reported to be planning to increase employers’ National Insurance pension contributions – a move Mr Brown’s old cabinet colleague Lord Blunkett has warned against.

At the time, Brown insisted that not a penny more would go into the NHS until reforms were put in place to ensure less money was wasted.

Twenty-two years later, the same debate is raging over the funding and performance of the NHS.

New Health Secretary Wes Streeting talks a good game on reform and appears to be serious about it.

But it took the Blair government years to understand how government worked, or more importantly, didn’t work.

Sir Keir Starmer, unlike many prime ministers, headed the Crown Prosecution Service before taking office.

But his start at number 10 was rocked by a series of controversies, including the sacking of his chief of staff Sue Gray, who was replaced by his political guru Morgan McSweeney.

Sir Keir says: “I believe in running towards problems.

“If you know what the problem is, what the challenge is, every business knows it, every family knows it, run to it and fix it.”

But Labor has yet to prove it can go into government, let alone stand, which doesn’t mean the Prime Minister’s approach is wrong, just that it may be riskier than a more cautious approach.

His government will have some wind in its sails, including the fact that the UK now looks a much more stable place to invest than under the Tories and compared to other turmoil-hit countries around the world.

Strikes by train drivers and junior doctors have been called off after agreements were reached with unions as the government seeks to boost Britain’s economic growth and reduce NHS waiting lists.

But the new government is inexperienced, and another economic shock or unexpected fallout from tax and spending reforms could easily derail its master plan.

Then the Tories can argue that it’s the same old Labor Party – raise taxes, borrow more, spend more and negotiate deals with unions where taxpayers will foot the bill to stop the strikes.

If Sir Keir and Ms Reeves’ big gamble pays off, a second term awaits them, but if not, that’s all they’ll have to fight for at the next general election.