There are no quick fixes for Labour - the only answer is to hold tight, says Andrew Marr

7 June 2025, 20:21

By Andrew Marr

@AndrewMarr9

The view from number 11.

No-one else will do it this week. So, with lobbying for more money coming from all sides; with Labour MPs angry and impatient; and with Westminster folk gleefully rubbing their hands at the prospect of an almighty political crash coming with Wednesday’s spending review… let’s try the experiment of seeing things from the point of view of the (deeply unpopular) Treasury.

Rachel Reeves is a skinflint who should be bolder.

Let’s think about that. She announced £40 billion worth of tax rises in the autumn, the biggest rise in a single year since 1993. She has partially U-turned on her winter fuel policy and found more money for defence. Meanwhile the official Office of Budget Responsibility said she was already raising Britain’s tax burden to its highest ever recorded level.

Not bold enough?

The political and social costs of those tax rises were substantial, from loudly furious farmers faced with inheritance tax burdens, through to all those companies who stopped hiring or raised prices because of the rise in national insurance contributions. But the October tax raid, bigger than predicted, allowed Reeves to raise public spending by £190 billion, focused on health and education.

So much for the natural skinflint.

Many of us, me included, wish that she and Keir Starmer had not made the promises they did on income tax and VAT during the election campaign; and so she could be doing more now to fund our defence against Russia and protect the poorest. But those promises were made. Just imagine what the papers who are already attacking Labour for clobbering the rich would be saying today if they had been broken.

All right; but the spending pressures are real and extreme, running from the need for more police to keep us safe on the streets, through to the collapsing justice system, local authorities on the edge of bankruptcy and demands on defence which go well beyond the money already allocated in a transfer from foreign aid.

Surely, surely, Rachel, you need to flex those boring fiscal rules and borrow more?

Well, she would say, we are already borrowing nearly £152 billion, £14.6 billion more than forecast. Public sector debt is now at 96% of GDP, the highest level since the early 1960s. Worse still, Reeves would say, after the Liz Truss experiment, the international bond markets are looking at Britain with a new scepticism; Germany recently declared it was going to spend more on defence. Its debt ratio is only 64% and yet it was punished for that by the markets: imagine what they would do to us?

These are the basic pressures on Rachel Reeves this week as she responds to a country desperate for more public spending. For all the anger among ministers and MPs who think they need more, the Chancellor - and I’ve spoken to her recently - feels she cannot make any big moves. The outside pressures on her over tax and borrowing are real, not a matter of her personal stubbornness call lack of imagination.

When it comes to long-term investment, it’s a different picture: we are going to see some really big announcements about nuclear power stations, for instance.

But on day-to-day spending things are genuinely very tight. Our fundamental problem is that the economy has for so long been underperforming. We simply aren’t earning enough to give ourselves the standards of living and of public services we have come to think we deserve.

There are no quick fixes. The only answer is to hold tight and hope the planning reforms and public investment bring real, good jobs and, as the economy grows, we can start to invest in better services again. But the public are impatient and exhausted, as the political arguments this week will show; and Labour has become hugely unpopular. Jittery ministers will just have to lump it.

This is a long haul.

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