“If we cannot afford it, we cannot do it,” Rachel Reeves said, many times, during her spending inheritance speech. It was like your mum explaining why you couldn’t have sweets on the way out of the supermarket. You’re bored of hearing it, kiddo? Then stop asking.
ITV News’s Shehab Khan went to the heart of the matter at the press conference, later in the day: is she really only discovering this now? And if it’s a wheeze, won’t that erode trust in politics?
“The truth is, we did not know about the £22bn black hole until after the election,” she insisted, to this and most subsequent questions. Whether the question will ever be answered definitively, and whether it would sweeten harsh decisions anyway, it’s far too soon to say.
Presumably quite soon, and surely by October’s budget, we’ll have got used to Rachel Reeves’s delivery. Right now, though, it’s like discovering Robert Peston’s cadence during the financial crash. “Hmm, this sounds bad,” I remember thinking. “I wonder what the ramifications will be for societies all over the world, whether the rich will stay rich and the poor will turn to fascism? But more importantly, did he seriously just put the emphasis on that syllable?”
So, yes, the public finances are in a parlous state, either far worse than expected or exactly the same as expected, but definitely in no way any better than expected: but more importantly, who told Reeves to take a breath on every three beats, so that her sentences get carved up mindlessly, insensitively, like territories on the losing side of a war? Why can’t she just take a breath when she needs one?
Never mind. I will pay cash money in the amount of £1 – it’s not much, but it’s more than the new chancellor has – to whoever can name the MP whose job it was to say “wow” at the dropping of every bombshell. “Upon my arrival at the Treasury, it became clear that there were things I did not know,” Reeves started. “Wow,” said a little voice from the crowd. Too soon, but never mind, good effort. “The spring budget wasn’t even close.” The total pressures added up to an additional £35bn. “Once you account for the slippage you usually see over the year, we inherited a projected overspend of £22bn.” “WOW”. Not in the future. Now.” (“Wow”). “Covered up by the party opposite.”
Jeremy Hunt would come back in, later, as cross as you’ve ever seen him (which realistically is not very), but as he listened, he looked like that mysterious sixth-former, in a group being reprimanded for smoking weed; the one whose idea you’re reasonably sure it wasn’t; the one who’ll get away with a detention while everyone else is expelled. Who knows how he does it?
For a speech that promised to expose the scale and seriousness of the problem, lay out immediate money-saving ideas, and set the course for the long term, the chancellor was hardly blessed. She set out to create a vivid picture of the Worst Thing Ever, but the outside world had other ideas, and news of the appalling knife attack in Southport had only just broken. Reeves’s main dramatic imperative, meanwhile, was that the Conservatives had been much worse than anyone could possibly have realised or predicted.
Then she got to laying out exactly what she meant; eye-poppingly expensive asylum schemes – Rwanda the headline, which had not been costed, leaving a £6.4bn overspend; a £1.6bn overspend on rail services; not enough money set aside for the promises made to Ukraine, which this government will nevertheless honour.
Fair play, that all adds up to a lot of money, but isn’t this exactly what it looked like at the time? Was anyone in the country thinking: “Yes, £800m on the Rwanda scheme, it may look hare-brained and impractical, nothing more than a performance of cruelty, but I’m sure, at least, they’ve worked out how to put the money where their mad mouths are.” Did any of us think rail services were going well? When Boris Johnson was out and about, spaffing (to use his memorable word) money on photo opportunities with Volodymyr Zelenskiy, did that look like the unfolding of a carefully accounted plan?
Reeves’s disaster tale lacked any element of surprise, without which it was just a lot of bad news. One thing after another. Like a hypochondriac at a bus stop running you through which bits hurt. Did we ask? Well, ok, yes, as responsible citizens, we ought to want to know. But still, did we ask?
Her immediate steps to curb spending were unnervingly modest: many people will agree that affluent pensioners do not need the winter fuel allowance – though there will doubtless be those on the income boundary that will suffer – but it’s hard to imagine that saving being enough to even touch the sides of the black hole. Do black holes even have sides?
Reeves’s long-term plans were more unnerving still: in the autumn, the “budget will involve taking difficult decisions, across spending, welfare and tax”. What does that even mean, beyond “whatever we do, you’re not going to like it”?
Hunt, fuming, hit back that these previously unknown unknowns were, conversely, “apparent to anyone who cared to look … Today’s exercise is not economic, it’s political. She wants to blame the last Conservative government for tax rises and project cancellations she’s been planning all along”. He looked for independent authority on this to Paul Johnson, of the Institute for Fiscal Studies, who had inconveniently tweeted that the asylum overspend was a “huge number” that “did appear to be unfunded”.
It seems unlikely that Johnson had missed something “apparent”. On the other hand, it’s possible in this regrettable scenario for both sides to be right; Rachel Reeves may be about to make political choices (that we’re not going to like), and it might still be possible to blame it on the Conservatives.