It feels like the most torturous build-up to any budget in recent history.
After a slow and painful climb up the mountain of manifesto-busting income tax increases, a hasty and inglorious retreat.
There’s been endless speculation about the two-child benefit cap, tax thresholds, mansion taxes, exit taxes, energy bills, and pension schemes. Now, finally, we’re just days away.
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Chancellor Rachel Reeves has set out her final stall in an opinion piece for The Sunday Times, in a bid to reclaim the iron mantle of fiscal discipline which has become somewhat skew-whiff amid the confusion.
She argues that increasing public debt is not a Labour virtue and insists her focus on Wednesday will be to grip inflation and address the cost of living – citing plans to freeze rail fares as an example of dealing with both.
But perhaps most interesting is her claim that controlling public spending “will require us to reform our welfare system too.” The government’s previous efforts to reform welfare and save £5bn ended in an inglorious failure.
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Another bloody battle looms
Now with a new secretary of state in charge of the Department of Work and Pensions, government fixer Pat MacFadden, Ms Reeves is clearly signalling that she wants to try again.
While not exactly a surprise, it sets the stage for another bloody battle with the party’s increasingly rebellious backbenchers.
Perhaps scrapping the hated two-child benefit cap will be the quid pro quo offered to show she’s listening to left-wing concerns.
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Transport Secretary Heidi Alexander, who had the unenviable job of avoiding questions about the budget on the Sunday morning broadcast round, was careful to frame the idea of increasing government spending on child poverty within the context of welfare reform.
Heavy hint two-child benefit cap to be axed
While she technically refused to be drawn on reports the chancellor is set to scrap the cap, she heavily hinted that was to be the case.
“Tackling child poverty is in the DNA of the Labour Party. Nobody wants to see kids going without,” she told Sky News’ Sunday Morning with Trevor Phillips.
“And we know that three-quarters of children who are living in poverty at the moment are in working households and growing up in poverty has consequences that last a lifetime.”
It would be odd to make such a passionate pitch for the party’s anti-poverty credentials if the government is about to reject a policy which charities say would be the single most cost-effective measure to reduce child poverty.
How much would axing the cap cost?
Scrapping the cap is estimated to cost between £3bn and £4bn.
When challenged by Trevor Phillips on the fact that polling shows the majority of voters believe the two-child benefit cap is morally right, she responded “and that is why we are all so determined to make sure that our welfare system is fair” – before going on to outline the work Mr McFadden is doing to encourage people into employment rather than a life on benefits.
The Tories don’t believe the Labour Party has any hope of getting welfare cuts past its rebellious backbenchers.
“I want to see the chancellor stand up and explain how she is going to control public spending, particularly welfare,” said shadow chancellor Sir Mel Stride.
“In order to make sure that we’re not having to put up taxes, and she’s not going to be breaking all these promises that she’s made, yet again.”
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Autumn of disastrous headlines
After an autumn of disastrous headlines from the accidental release of foreign prisoners and Angela Rayner’s stamp duty to Peter Mandelson’s links to convicted sex offender Jeffrey Epstein, the authority of both the prime minister and the chancellor is much shakier now than it was even after the previous welfare rebellion.
A review into Personal Independence Payments launched as part of the fallout to those efforts is unlikely to recommend cuts.
Getting a greater share of the 6.5 million people currently reliant on benefits into the workplace has long been the holy grail for chancellors looking to boost economic growth – and scale back a spiralling health-related benefits bill which looks set to top £100bn by the end of the decade.
But multiple governments have failed to get a handle on the issue.
It seems unlikely at this moment of such fractious internal party relations that Rachel Reeves can really rely on the prospect of any serious welfare savings to help balance the books.
But she’s keen to highlight to both voters and the bond markets that she wants to try.
