Reeves will aim for optimism but reality paints a different picture
Sky’s Sophy Ridge is a thoughtful and formidable interviewer, as Treasury Minister James Murray discovered on Monday evening. The Labour MP, who seems a decent sort of chap, was doing his best to defend his government’s screeching and humiliating u-turn on cuts to winter fuel payments, claiming – in the words of the Prime Minister and Chancellor – that they were able to abandon this unpopular policy because they’ve turned around the British economy.
Ridge, demonstrating more patience than I’d have been able to muster, replied: “I really don’t say this lightly, but I don’t believe that’s the truth for why you’ve reversed this.” She isn’t alone, and not everyone would have put it so politely. Labour dropped the policy because it is mentioned – with anger – in every single focus group, and was about to become as toxic as Thatcher’s poll tax. With Reform UK leaving Labour in the dust, something had to give.
But of course, no politician could acknowledge this and so a sensible-sounding reason had to be conjured up. Reasonably healthy first quarter GDP growth figures came to the rescue. Keir Starmer said yesterday “The economy is improving, and I want you to feel that in your day-to-day lives – that is why we are expanding eligibility for the winter fuel allowance.”
This was a remarkable statement for a number of reasons, not least the fact that none of it is true. The economy isn’t improving, as fresh GDP later this week will almost certainly confirm and as yesterday’s jobs data so clearly demonstrated.
Payroll employment has fallen by just under 280,000 since June 2024 with the bulk of the reduction coming in the immediate aftermath of Labour’s hike to National Insurance contributions. Turns out, if you make employment more expensive you’ll get less employment.
As for the claim that “we are expanding eligibility for the winter fuel allowance” – it’s up there with “we’ve always been at war with Eurasia” – one of the Party’s many lies in George Orwell’s dystopian 1984. Technically, eligibility is expanding but only after ministers reduced it. Do they want people to be grateful?
Today, the Chancellor will claim that her Spending Review will help “renew” Britain – and bits of will help in that endeavour, over time, but it will be hard to square the Chancellor’s optimistic tone with the reality of an economy undermined by high taxes and a government undermined by incompetence.