In the afterglow of Rachel Reeves’ Spending Review, Labour’s press machine was quick to declare victory. Behind the slogans, the figures, and the bumptious cheers from the Labour benches, reality reared its head — fast and unflinching.
Yes, the NHS has gotten a financial uplift. Day-to-day spending is to increase to 3% per year. A welcome move. But let’s not uncork the bubbly just yet – since 1999, most parliaments have averaged a 4% increase. And anyone who’s ever tried to buy medical equipment knows, health inflation tends to swagger above consumer average.
And behind the figures and planted slogans; Reeves tried to hide—like a magician shuffling a bent card back into the deck—the real sin. The real detail, if you look hard enough, is hidden in plain sight. The capital budget – for bricks, beds, scanners and surgical machines – is flat. Flat in real terms over the review period. So while Reeves praises its “Labour choices”, the reality is a Review that feels like it offers the NHS by putting on fresh coat of paint on a house riddled with damp.
And what of social care? A passing mention? No. Not a word. A critical part of tackling patient backlog, ignored. As Daisy Cooper rightly called it – a missed opportunity. Labour hoped some wouldn’t notice. But some of us did while social care is kicked back again into the long grass.
Much like some of us noticed Labour’s clumsy sleight of hand with the bus fare cap. “We’ve kept it at £3!” I saw them gloat on their social media’s. Yes, after you raised it from £2 last year. The party that hiked the fare now wants applause for “protecting” the price they hiked up. Working people, like myself, who actually use buses – we’re not daft. The message smells less of sincerity, more of spin and exhaust fumes.
Still, I’ll admit: not all was bleak.
Housing got a thankful boost after years of neglect. Thanks in no small part by Angela Rayner’s own efforts, if press gossip were to be believed where she had to put up a fight with the Treasury. Thanks to this effort, she got £39bn commitment over ten years for social and affordable housing. A real win, even if her department took a 1.5% day-to-day spending hit in the process. A principled trade-off? Maybe. But credit where due.
What confuses me, though, is Reeve’s insistence on talking strategy, not just spending. She dropped “economic strategy” like confetti across her speech. I very rarely find myself in agreement with Mel Stride (or any Conservative, frankly), but her justification for cutting Winter Fuel Payments – that it was an “economic necessity” – led to the longest U-turn that left me nodding along with Mel Stride. He described in his confusion about how this all squares with Labour’s own fiscal rules. Because for all the talk of strategy, what Reeves delivered didn’t look like discipline.
Now, I wouldn’t go as far as labelling, as Mel Stride did as “spend now, tax later” situation. But I am left wondering: how exactly does this get us closer to reducing the deficit? Or, more pointedly, how do we stop bleeding £95bn a year on debt interest alone – money that could actually fix the NHS, boost public transport, fund housing, and lift social care off the floor?
And as I write, GDP is down 0.3% this quarter. Yet, Reeves clings to the Employer NICs hike. A tax that hits confidence and hiring squarely between the eyes. Growth is the lifeblood of her strategy, and yet she strangles it at the root.
To be clear: I’m no deficit hawk. We should spend to improve lives. And tax, where fair, is the price of civilization. But there are better taxes. A Land Value Tax, for instance. Or – dare I say it – a one-off Wealth Tax. Perhaps having a serious conversation on having a one-off wealth tax to help pay down as much of the national debt and thus debt interest to free up money that can actually be useful is something for another day.
There is, of course, far more that could be said — on childcare, local government, transport. But at some point, we must stop counting the line items and start asking what kind of country we’re trying to become. Reeves’ Spending Review was okay. But nor was it a vision. If Labour truly wants to mark a break from the last fourteen years, it’ll take more than tinkering. It’ll take courage — not just to spend, but to rethink. Until then, no matter who’s holding the red box, the country will keep feeling like it’s still waiting for
* Andrew Chandler is the Digital Officer for North Staffordshire Liberal Democrats
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8 Comments
Damned if she does damned if she doesn’t…
Agree with Greg Hyde. It would be more useful to get the views of a professional economist, or, a response from Vince Cable.
@David Raw
How do you know I didnt study economics 😉
Also, if you dont have “expert” opinion that makes anyone else’s opinions invalid. Bit rude dont you think? Plus, Im sure if Vince wants to write an opinion he might well do and might have written it in a Newspaper.
Vince isn’t on LibDem Voice on tap ya know.
I think @Andy you’re right that there’s not much vision in the spending review, but to be fair to Reeves, being a visionary isn’t really the job of the Chancellor. It’s up to the Prime Minister, and the various Secretaries of State to figure out visions for how their own departments can do things differently in a way to get better results. The Chancellor certainly could be more visionary about our tax system, which needs fundamental reform. It’s a shame that Rachel Reeves appears unwilling to do that. But I don’t think it’s up to her to be visionary about how other departments spend their money.
Specifically on the health service – you seem to think that it’s poor and unvisionary that Labour aren’t promising more than 3% yearly increases in health spending. But a health service that over time keeps eating up more and more of the Government’s budget, thereby leaving less and less for everything else is not my idea of a decent vision for health. A better vision would be, how we can best live differently and arrange healthcare to get better result without throwing ever more money at health. And that’s Wes Streeting’s job, not Rachel Reeves’ job.
On the bus fare cap. Yes it’s a shame that it was increased from £2 to £3. But let’s not forget even that is vastly better than the situation less than 3 years ago, when there was no fares cap at all!
@Simon R
Always great to hear your perspective — certainly livens the discussion!
I partly agree that vision isn’t solely the Chancellor’s job, but given the soundbites/slogans in her statement (something Labour still struggles to land naturally), she was clearly playing politics. Vision does often come down to what the Treasury can fund. That’s why, for me, the political win this week goes to Angela Rayner — she managed to push through her vision despite Treasury resistance.
That said, I might’ve been a bit harsh, but given the GDP forecast issues, prolonged U-turns, and general missteps, I think any other Chancellor might’ve been replaced by now — and that falls on the PM. Rumours suggest No.10 wanted to reverse the Winter Fuel decision earlier, but Treasury pushed back. Plus, changing the fiscal rules to use Public Sector Net Financial Liabilities shows an intent to borrow for growth — something I don’t oppose, though rising debt interest worries me. The Sizewell C case shows she’s not really following through though, limiting her room to manoeuvre.
I agree on tax — we need a real overhaul, even if this was more a Spending Review than a Budget.
On health: yes, preventative investment is key, but it needs serious upfront funding. And social care is clearly feeding into hospital backlogs now — again, more investment needed.
The bus fare cap was a bit tongue-in-cheek from me, but it’s frustrating to see them claim it as a “win” after raising fares.
Good thoughts as always — a pleasure!
“….. It would be more useful to get the views of a professional economist”
The curious thing about Economics is that you can easily shop around for whatever opinion you like from a suitably qualified person. It’s quite unlike any other academic discipline in this respect. Real scientists might disagree at times but they will come to a consensus eventually.
For example, there was some considerable opposition to Einstein’s relativity theories in the early 20th century but by the late 20th century they were universally accepted. Einstein, himself, was shown to be wrong in some of his criticisms of Quantum theory.
It’s just about impossible to remove the political element from economic theory and I can only assume that this is the reason for the inability of Economists to reach a consensus.
So we are on our own I’m afraid. None of us can use an argument from authority on the merits of Ms Reeves budget.
@David Raw: Vince wrote a qualified defence of Rachel Reeves a few days ago on this site.
Might the opinions of a “Professional Economist” depend upon the views of those who pay her or him?
Below is an opinion on the latest (mal) Spending Review from a professional accountant who does not seem to produce paid for opinions. opinions.https://www.taxresearch.org.uk/Blog/2025/06/13/neoliberalism-is-consuming-our-well-being/
Might professional accountants be valid makers of comments?
Ditto those who are going to have their inadequate incomes reduced?
Ditto those who attempt to feed the some 30% of our permanently underfed/starving children?