Rachel Reeves is ‘limping’ from one event to the next, the new head of the Institute for Fiscal Studies has warned in a stark assessment of Labour’s economic record.
Helen Miller said while Labour came into office on the promise of ‘mission-driven government’ and ‘long-term thinking’, reality proved different.
Fears about small downgrades to Britain’s growth prospects meant that the Budgets and statements were dominated by concerns about the parlous state of the public finances and if tax hikes or spending cuts would be needed, she said.
‘We continue to limp from fiscal event to fiscal event, obsessed with whether run-of-the-mill revisions to the economic and fiscal outlook have reduced the fiscal headroom and whether tax or spend takeaways will follow,’ said Ms Miller. ‘We need to break out of this cycle.’
The remarks add to the increasingly negative perceptions of Labour’s handling of the economy after a year in power, with business leaders and economists unsettled by the direction being taken by Ms Reeves – and bond markets also becoming anxious.
Ms Miller made the comments as she steps up from deputy to replace Paul Johnson as director of the IFS, a respected financial think-tank.
Economists and businessmen continue to wonder whether Ms Reeves will have to put up taxes in her autumn Budget after Labour’s U-turns on welfare and winter fuel payments.
Growth also looks to be deteriorating, and defence spending must be increased as per new Nato rules and the Prime Minister’s pledge. These shortcomings may open a financial black hole.
Rachel Reeves is ‘limping’ from one event to the next, the new head of the Institute for Fiscal Studies has warned in a stark assessment of Labour’s economic record
The remarks add to the increasingly negative perceptions of Labour’s handling of the economy after a year in power
Economists and businessmen continue to wonder whether Ms Reeves will have to put up taxes in her autumn Budget after Labour’s U-turns on welfare and winter fuel payments (stock photo)
Ms Miller said it was ‘safe to assume the Chancellor will stick to her fiscal rules’ on bringing down debt and borrowing. She added: ‘But that alone doesn’t automatically equate to sustainable public finances.’
Last week the Office for Budget Responsibility (OBR) warned Britain was effectively living beyond its means, saying it ‘cannot afford the array of promises that it has made to the public’.
Ms Miller said: ‘There are lots of reasons that demands for government spending could run far ahead of tax revenues.
However much this – or any future – Government is willing to tax and spend, it won’t be enough. We need better designed policies.
‘And we desperately need economic growth. While that wouldn’t eliminate the need for trade-offs it would make them more palatable.’
Ms Miller also echoed the OBR’s warning that the abandonment of planned spending cuts was leaving the UK’s finances more vulnerable.
She said: ‘Politicians need to level with voters about the scale of the challenges and to make the case for bold reforms.
‘Lessons must be learned from the recent disability benefits U-turn, and learned quickly, so that reform efforts in other areas land more successfully.’
Figures show the economy shrank for the second month in a row, adding to the Chancellor’s headaches ahead of the autumn statement.
