0:00
cracks are appearing in the government's
0:02
economic policy some made by ministers
0:04
others by external pressure the question
0:07
is can Rachel Reeves stay in control and
0:10
does K star want her to welcome to the
0:13
week in business with me Christian
0:18
May it's never a good sign when a senior
0:21
cabinet minister appears unaware of a
0:23
major announcement on their patch yet
0:25
this is the position in which the
0:27
chancellor appeared to find herself on
0:29
Wednesday she tooured a factory or a
0:31
warehouse or somewhere requiring a high
0:33
viz jacket and she was asked about
0:35
rumors of a possible U-turn on the
0:37
controversial cuts to winter fuel
0:38
payments she said that policy stands
0:42
adding it was necessary to stabilize the
0:44
public finances and remember that was
0:47
the line repeated incessantly by
0:49
ministers as justification for the cuts
0:52
leader of the House of Commons Lucy
0:53
Powell said the cuts prevented a run on
0:56
the pound while Transport Secretary
0:58
Heidi Alexander said that if they hadn't
1:00
taken the acts to a universal pension of
1:02
benefit we'd have seen the sort of chaos
1:04
we saw under the Liz Trust government
1:06
but just hours after the chancellor said
1:09
that policy stands the PM was on his
1:11
feet in the Commons standing it down
1:14
there's no doubt that the issue became
1:16
completely toxic for Labour and it's
1:17
been a major contributing factor to
1:19
their dismal poll ratings and their
1:21
local election and bi-election drubbing
1:24
it's what people bring up when you ask
1:26
them what they think of Labor so a
1:28
review is underway though details are
1:30
scarce and there's no sense yet as to
1:32
how they will re-evaluate it when it
1:34
will take effect or where the money
1:36
comes from star said the government was
1:38
able to review the policy because the
1:40
economy is growing it's a bold move to
1:43
pin the U-turn on a strengthening
1:44
economy when most economists expect
1:47
first quarter growth of 0.7% to be
1:49
something of a oneoff what's more data
1:52
this week revealed that the public
1:53
finances are in a pretty shoddy state
1:56
further eating away at what little
1:58
fiscal headroom the chancellor had left
2:00
herself ahead of the autumn budget the
2:03
government borrowed 20.2 2 billion
2:05
pounds in April of this year mostly due
2:07
to higher spending commitments in the
2:09
form of public sector pay and of course
2:11
in debt repayments the Office for
2:13
National Statistics said government
2:14
borrowing in the financial year 202425
2:17
was 148.7 billion 11 billion pounds more
2:21
than the OBR had forecast it's not
2:24
pretty economists say that the latest
2:26
public borrowing figures mean the
2:27
Chancellor's fiscal headroom has been
2:29
reduced to a mere 6 billion pounds a
2:32
rounding error in government expenditure
2:34
ruth Gregory of Capital Economics says
2:36
that if the Chancellor wants to stick to
2:37
her fiscal rules more tax hikes in the
2:39
autumn budget will be required that's a
2:42
position shared by most analysts now
2:45
this brings us back to Rachel Reeves she
2:48
has described her fiscal rules as
2:49
ironclad and has repeatedly said that
2:52
the 40 billion pound tax rate from her
2:54
first budget was a one-off never to be
2:56
repeated with MPs in her own party
2:59
having successfully pressured number 10
3:01
into a winter fuel U-turn they're likely
3:03
to now turn their attention to other
3:05
welfare cuts that so many on the left
3:07
find unpalatable plus the government
3:09
will have to convince those same MPs
3:11
that their upcoming spending review
3:13
where departmental budgets are likely to
3:15
be slashed is necessary does Starmmer
3:18
have the nerve to see this through his
3:20
biographer Tom Baldwin told Times Radio
3:23
this week that the PM isn't the kind of
3:25
politician who says "This is what I
3:27
stand for." You can read that as either
3:29
a compliment or criticism either the PM
3:33
is a ruthless pragmatist who changes
3:35
direction when he deems it necessary or
3:37
he's simply flapping in the wind
3:39
unbothered by conviction or principle i
3:42
think the chancellor's fate depends on
3:43
which of these two descriptions fits
3:46
Kristama if he sticks to his mantra of
3:48
tough decisions then Rachel Reeves
3:50
remains a necessary a vital part of that
3:53
argument but if he thinks things have
3:54
changed the economy the world reforms
3:57
surge in the opinion polls and he wants
3:59
to loosen the purse strings he won't be
4:01
able to do it under a chancellor whose
4:02
credibility such as it is has been
4:04
forged by making the case to stick to
4:07
the painful fiscal rules and make tough
4:09
spending decisions in that context it
4:12
isn't hard to see a scenario where Star
4:14
thanks Rachel Reeves for her service
4:16
credits her with saving the economy in
4:18
the first year of a Labor government
4:19
she's cleared up the Tory mess she's
4:20
reassured the market she's done a great
4:22
job and then he moves her into the
4:24
foreign office of course the only reason
4:26
for doing this would be to pave the way
4:28
for abandoning the fiscal rules
4:30
borrowing more and cooking up some new
4:32
tax rises examples of which have been
4:34
handily put into the public domain this
4:36
week via a memo written by Angela Raina
4:38
the deputy prime minister in which she
4:40
suggested a whole host of tax rises on
4:43
savers pensions shares and banks so in
4:46
light of the alternative I very much
4:48
hope that Rachel Reeves remains in post
4:51
the alternative would turn the
4:52
government's poor record on economic
4:54
growth into a catastrophically high-risk
4:57
experiment driven by even harder high
5:00
spend and high tax instincts so odd as
5:04
it may seem consider this the launch of
5:06
a save Reeves campaign i don't agree
5:10
with many of Rachel Reeves policies but
5:12
I would prefer what passes under her for
5:14
discipline and restraint to no
5:17
discipline and no restraint
5:19
well on that note I'll say thanks for
5:21
watching that's it from me this week
5:22
stay up tod date and in the know with
5:24
the city app and on cityam.com and I'll
