Keir Starmer told his cabinet today that the spending review marked the start of a “new phase” that will deliver Labour’s much-promised change. Which can be roughly translated as: we hope the public forget our mistakes in our first year and give us a fresh look. For some voters, that will prove a big ask.
Despite Starmer’s plea, Rachel Reeves’s spending review felt more like one that would be made towards the end of a five-year parliament – not four years away from the next election.
The chancellor insisted her choices were “Labour choices”. But as I watched her deliver her statement, I couldn’t help thinking that much of it was aimed at seeing off the rising threat to Labour from Reform UK.
Political knockabout on big Commons occasions is nothing new – Reeves also directed her fire at the Conservatives – but her several attacks on a party that has just five MPs showed who is really setting the political agenda.
Reeves deployed Liz Truss’s disastrous mini-Budget – not only as an example of Tory “chaos”, but to highlight the fact that Farage praised it at the time, as she warned that Reform “would do the same thing all over again” through its unfunded tax cuts and spending rises. Reform is “simply not serious”, she declared. For good measure, the chancellor reminded us of Farage’s interest in funding the NHS through an insurance-based system.
Many of the measures Reeves announced today appeared to have been drafted with Reform in mind, notably a welcome change in the Treasury’s value-for-money rules (set out in a document known as the “green book”). This will allow the approval of more capital projects in the North and the Midlands, where Reform is a threat to many Labour seats and where Labour strategists are convinced the next election will be won or lost. It’s back to “levelling up” – even though Reeves banned the phrase after Boris Johnson broke his promise to put it into practice.
The change means that London and the South East will lose out, which has prompted a row between the government and the capital’s Labour mayor, Sadiq Khan. Reeves won’t lose sleep over that, as it will amplify her message in the red wall.
Indeed, some Labour MPs quip that Reeves, who is the MP for Leeds West and Pudsey, wants to be seen as “queen of the North”. But Andy Burnham, the mayor of Greater Manchester, is already seen as the region’s king, and has no intention of giving up his crown. Among Labour members, Burnham is the favoured successor to Starmer, and Reeves is no longer in the race. Angela Rayner, who is in second place, would also aspire to be the northern queen.
While voters in the red wall will welcome the chancellor's £15.6bn investment in local transport schemes outside London and the South East, these will take years to come to fruition. Her long list of announcements gave the misleading impression of a “spend, spend, spend” chancellor, even though her review will mean an immediate squeeze on day-to-day spending outside health and defence. That will feel like austerity to voters – and will not be welcomed in the red wall – even if, on paper, it is not as severe as the cuts begun by George Osborne in 2010.
Will Labour’s full-frontal attack on Farage work? I think Labour has a lot more work to do to combat the “Farage factor”. According to More In Common, the public now trusts Reform as much as Labour to provide support for vulnerable people, as well as on the economy. Reform has a narrow lead over the Tories on tax: 19 per cent trust Reform most to keep taxes low, compared with the 18 per cent who trust the Tories the most.
However, 46 per cent of people say Reform would be a risk to the economy, while 29 per cent disagree. Interestingly, comparing Farage’s recent policy announcements to the Truss mini-Budget erodes net support for his policies by 20 points. That is why Reeves deployed this ammunition, and why we will hear it thousands of times before the next election.
The bad news for Starmer: the public has so lost faith in mainstream parties that they feel they have nothing to lose by taking a punt on Farage. Luke Tryl, UK director of More In Common, said: “It’s clear that Reform’s gains are driven by a declining trust in other parties’ economic competence and a willingness to ‘roll the dice’ rather than a widespread trust in Reform.” So Labour, and the Tories, could damage Reform by regaining economic trust. But it won’t be easy for either of them.
Starmer won’t win a second term solely by attacking Farage. A winning coalition will be recreated only if Labour improves living standards and public services. Despite Reeves’s big-sounding numbers – and her claim of a £300bn spending boost – the plans she announced today will not guarantee such progress unless she also boosts economic growth.
