There were times – a lot of them in recent months – when people have hypothesized that Rachel Reeves would not survive as a chancellor in the winter.
It was a particularly bruised year for the Chancellor of the chessboard – Tears in the House of Commons to the various swirls on economic policy which left a black hole in its tax plans.
There was therefore more than a little symbolism to the fact that it went on stage today and dominated the first full day of the Labor Party Conference.
Last policy: Allied starmer “not moving the tax increases”
His performance was confident – more confident than many had planned it. Relatively light on the new economic policy, his speech may be better described as a kind of coil of “best bits” of work so far: more money for investment, more money for schools, more funding for the NHS as well as rescues for British Steel and, recently, Jaguar Land Rover.
His problem, however, is that this closely controlled speech, which is part of a closely controlled conference, is the starting weapon for something that Ms. Reeves has much less control: the long roller-coaster towards the following budget.
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Darren Jones fails to exclude income tax or VAT increases
Later this week, the Office for Budget Responsibility (OBR) will deliver its first estimate to the Treasury of the planned public finances in the years to come. Although the OBR is a public organization, it generates its own forecasts in secrecy, so although the treasure has a team of economists who tries to undergo the OBR, nobody at Downing Street is quite sure where it will end.
This estimate (which will be cut and modified in the coming weeks when approaching the budget) is of supreme importance, because the Chancellor has embarked on a set of tax rules – limits the height of the current budget and a measure of the national debt, could obtain. And since OBR’s opinion on the state of the economy is what determines these figures, the figures it offers later this week is of excessive importance.
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“ Do things of work ”, says the boss of the union
Currently, speculation to the government (note that for the moment, it is a speculation purely – nobody knows with certainty what the OBR will say) is that the “ black hole ” between the budgetary rules of the chancellor and the last estimates of the OBR of the size of the current budget – should be around 20 billion pounds sterling at 30 billion sterling pounds.
In other words, for lack of a better sentence, a lot of money – so much so that it is very difficult to see how you could make up the gap with many small tax increases. Indeed, it is very difficult, in the best of cases, to raise tens of billions of pounds without resorting to one of the three major taxes in the United Kingdom: income tax, national insurance or VAT.
The problem of work, however, is that he is committed to his electoral manifesto last year to not increase any of these taxes. It is, in other words, written by a largely part of its manufacturing. If he was not engaged in his budgetary rules, nor to respect the speech of the OBR, or for the tax guarantee of the manifesto, he would have much more room for the maneuver.
As it stands, it faces roller coaster as the budget approaches. There will be many twists and turns in the coming weeks.