Reeves’s budget from hell proves the technocrats have failed us

Rarely has a budget statement been anticipated with such trepidation. The public had been hunkering down in anticipation of painful tax rises in Rachel Reeves’s budget. A bombshell pre-budget poll found zero per cent of Britons think the economy is in a ‘very good state’; one per cent think Reeves is doing a ‘very good job’. Businesses have been panicking, too, reporting their sharpest fall in confidence since the 2008 financial crisis. Investors – aka the dreaded bond markets – had priced the ‘risk premium’ of government debt higher even than at the time of the Liz Truss mini-budget meltdown.

Reeves herself had clearly been dreading delivering today’s statement, with 26 November being the latest a chancellor has held a budget in at least the past 10 years. Presumably, she had hoped that something, somehow, would emerge from somewhere to narrow the £20 billion or so ‘black hole’ in the public finances… to nudge growth above the abysmal 0.1 per cent the economy eked out last quarter… to temper recent rises in unemployment, now back at lockdown levels.

As is now abundantly clear after Reeves’s budget from hell this afternoon, nothing has turned up to save her. The Office for Budget Responsibility (OBR), whose report was mistakenly leaked ahead of the chancellor’s speech, warns of slower growth, higher inflation and weaker productivity than expected. Borrowing is to go up this year and next. Debt interest payments will continue to dwarf public spending on education and defence – even as the tax burden stands at its highest since the Second World War.

It’s not hard to fathom what has brought us to this crisis – a toxic combination of runaway welfare spending and pitiable growth. In the Commons, Reeves was keen to blame this mess on her party’s favoured bugbears – the nasty, evil Tories. And, of course, no one could reasonably argue that Reeves inherited a rosy economic picture. But it was the Labour chancellor, Denis Healey, who coined the phrase, ‘When you’re in a hole, stop digging’. Reeves, her party and indeed the British establishment are determined to double down on their worst mistakes.

On welfare, the Labour government’s modest attempt to reform incapacity payments prompted a major backbench rebellion back in the summer. Never mind that a staggering one in 10 of the working-age population now claims some sort of disability benefit – either the health element of Universal Credit or a Personal Independence Payment (PIP). Bleaker still, claims are rising fastest among the young, surging by 69 per cent among 25- to 34-year-olds in the past five years. Apparently, it is a core ‘Labour value’ to put vast numbers of workers out to pasture. And so non-pension welfare spending is to carry on rising unabated.

On growth, Reeves has treated the word like a magical incantation, but policies to deliver it are sorely lacking. At her summit back in January, I counted at least 50 uses of the word ‘growth’ in the chancellor’s speech. Yet Labour has failed to deliver its promised planning deregulation that would allow Britain to get building. This week, the UK government was warned that a new nuclear power plant had been forced to spend £700million on an elaborate scheme to save a handful of salmon, all to meet absurd green regulations. Housebuilding, central to Labour’s growth plan, recently fell at its sharpest rate since the Covid lockdown. Bureaucracy, it seems, is the only growth industry in a Rachel From Accounts-run Britain.

Reeves has also championed the suicidal energy and climate policies that are causing rapid deindustrialisation. The highest energy costs in the developed world are laying waste to the car, chemicals and steel industries. The very industrial processes that made Britain a prosperous country have all but been outlawed under the Net Zero regime. Yet Reeves once called the eco-agenda the ‘industrial opportunity of the 21st century’.

Britain’s economic crisis demands visionary leadership, bold decisions and radical change. Yet predictably, Reeves has opted to merely muddle through. As was widely leaked ahead of the speech, she has opted for a ‘smorgasbord’ of tax rises to try to fill her budget shortfall. Taxes on hotel stays. Taxes on milkshakes. Taxes on taxis, and taxes on Temu. And even a digital ID to ensure you pay those taxes. As Sky’s Ed Conway anticipated, the sheer volume of policies have made Reeves’s second budget the most complicated on record. Even the New Labour windbag, Gordon Brown, limited himself to announcing just 10 to 20 new tax policies per budget. Rachel From Accounts just unveiled more than 100 tax-tinkering measures.

None of this amounts to a serious programme for government or a plan for transforming Britain’s ailing economy. It speaks to a chancellor, a government and a political class in hock to technocracy. With no principles or vision beyond their own short-term survival. Who lack the nous to spot the crises that are piling up on the horizon. Who lack the leadership needed to challenge the elite consensus. After all, from Net Zero to welfarism, the most damaging policies of all have gained the technocrats’ seal of approval. Labour has tested their ideas to destruction and then some.

At the end of her speech, Rachel Reeves declared that she had met her ‘fiscal rules’, to huge applause in the chamber. She had achieved her main aim of pleasing the OBR’s bean-counters. You could hardly ask for a clearer illustration that what satisfies the technocrats is a disaster for the country at large.

Fraser Myers is deputy editor at spiked and host of the spiked podcast. Follow him on X: @FraserMyers.