People are right to ask what is the point of Labour?' when it can't agree on anything | Martin Kettle

"By instinct and conviction, Rachel Reeves is a traditionally social democratic, centre-left Labour chancellor. When she delivers her budget next week, though, those qualities will be hard to discern. The reason for that is simple but powerful. She has become hemmed in on every side by avoidably tight commitments on taxation, spending and borrowing. Above all, however, she is hemmed in by Labour politics. It did not have to be this way."

"Reeves would have had a freer fiscal hand if she and Labour had not ruled out increasing all the three main personal taxes at the 2024 election a choice the former Conservative minister David Willetts described this week as catastrophic. Reeves might also have won herself more elbow room, albeit at some political cost, if the new government had moved very decisively to say that, having studied the figures, the triple-tax pledge was in fact unsustainable. These, though, are might-have-beens. They were roads not taken."

"Instead, Reeves got the politics wrong. She waited until this month before belatedly starting to argue, albeit entirely correctly, that the tax pledge had to be broken if Labour was to fulfil its other commitments and to regain direction. Yet in little more than a week she had to abandon the idea in a humiliating retreat. The chief cause of the U-turn was the politics of the modern Labour party."

Rachel Reeves approaches the budget as a traditionally social democratic, centre-left chancellor but faces severe fiscal constraints. She is hemmed in by tight commitments on taxation, spending and borrowing and by Labour party politics. Labour ruled out increasing the three main personal taxes at the 2024 election, a pledge described as catastrophic by David Willetts. A decisive abandonment of the triple-tax pledge earlier could have created fiscal room, but Reeves delayed. After briefly arguing the pledge must be broken to meet commitments, she abandoned that position following a backbench revolt, where whips warned an income tax rise would not pass the Commons. The retreat undermines Reeves’s credibility and complicates the budget and government standing.

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