Reeves is now a puppet chancellor. She may front any future tax-and-spend decisions, but others will be pulling the strings.
Reeves isn’t just scorned by the cabinet – she’s scorned by Labour voters too. Some 43% say they have a negative view of her, compared to 33% with a positive opinion.
No wonder rivals feel emboldened to drive all over her.
In her Spring Statement, Reeves targeted disability benefits in a bid to shave £3.5billion from spending.
Labour’s base wasn’t having that. They saw it as a return to Tory-style austerity, something they thought they’d voted to scrap.
I’m betting that policy will never happen, and Reeves’s credibility will take another mighty blow.
Her image as a tough decision-maker has crumbled. She’s now at the mercy of Labour’s grassroots, and that puts taxpayers in the firing line.
We saw yesterday what this means.
The UK may be on a fiscal knife edge, but that didn’t stop Reeves waving through a second year of inflation-busting pay increases for public sector workers.
The unions have learned that Reeves isn’t in charge. All they have to do is threaten a strike, and the money is theirs. They have more power than her now.
Public sector borrowing rose by more than expected to £20.2billion last month, the fourth-highest April figure on record.
The UK is still living wildly beyond its means. The government borrows more than £100billion a year, but Reeves can’t even push through a £3.5billion spending cut.
This leaves her with just one option. She will have to hike taxes in the autumn Budget. Again.
That’s what Angela Rayner wants, and she has the party behind her. If Labour members could vote tomorrow, she’d be PM.
Yet more tax hikes will kill growth, just as the last lot did. I actually think that Reeves has belatedly worked that out, but it’s too late. Her view doesn’t count.
Britain is now stuck in a fiscal doom loop. The same goes for Rachel Reeves’s political career. We’ll all go down together.
