Katie Lam: Reeves has nobody to blame but herself | Conservative Home

Katie Lam is a shadow Home Office minister and MP for Weald of Kent.

“It’s nice, isn’t it? The quiet.” So said Otto English (the nom de plume of anti-Brexit activist Andrew Scott) six days after Labour’s election victory last year. In just six words, he perfectly summarised the attitude of many within the Labour Party.

Far too many Labour MPs genuinely believed that this country’s structural challenges would be solved by a simple change of personnel at the top. We heard throughout the campaign that if Labour won, the adults would finally be back in the room, and that they’d be able to fix Britain’s economic or public sector woes through sheer force of good intentions.

According to this attitude, it isn’t hard political choices that the country needs, but a new set of well-meaning ministers. Then snap! The job is done.

Naturally, this attitude survived contact with reality for all of ten minutes. Since last July, we’ve seen economic growth continue to stagnate, while public spending and gilt yields have soared ever higher. Businesses continue to struggle under mountains of red tape, knowing there is much more to come, with many forced to close their doors for good. Trust in the British economy is now so low that, at points during the past six months, we’ve seen the cost of borrowing reach heights not seen since I was six years old, higher even than during the Global Financial Crisis or in the immediate aftermath of the Mini-Budget.

Yet at the same time, we’ve seen the Treasury borrow record-breaking amounts of money, knowing that paying that money back will be more expensive than at any point in the past few decades.

Rachel Reeves didn’t inherit the ideal economy. Few chancellors do. But many of the decisions that she has made, and that Labour has made more broadly, have actively made the situation worse – and in large part, it’s because of this no trade-offs, ‘adults in the room’ attitude.

Because the truth is, to make our current economic picture work, we do need to make difficult decisions and trade-offs. The simple reality is that the Government spends far more than it brings in, mostly through taxation.

In this situation, governments have a few options available to them. They can cut the amount of money that the government spends. They can raise taxes to increase revenue (and hope taxes are not so high that this leads to a self-defeating fall in receipts). They can borrow more money to cover the shortfall. Or they can try to increase the amount of money raised in tax by removing government-imposed barriers to growth, like regulation.

Naturally, they can also do some combination of these four things. The Conservative Party has committed to the first and the final one.

In July, we saw that Reeves wouldn’t be able to cut spending. The Government’s attempt to address welfare costs – which would not even have cut spending, but only cut the growth in spending – was spiked by Labour backbenchers. The bill that eventually passed through Parliament actually ended up increasing welfare spending. Any attempt to control our ballooning welfare bill is met with cries of horror from Labour MPs, many of whom simply don’t recognise that there’s an inherent problem in spending ever-more taxpayer money on the ever-expanding number of people who do not work.

We’ve also seen that Reeves won’t be able to increase revenues by allowing the economy to grow. Any talk of cutting red tape is swiftly met with condemnation from her Labour colleagues. This should come as no surprise, given the complete lack of business experience on the Labour frontbench. For proof of Labour’s absolute inability to let people get on with making money, look no further than their disastrous Employment Rights Bill, which is set to make things even worse.

And so, with these options rendered politically impossible by her own inability to manage her party, Reeves has been left with borrowing, and taxation.

Both options are pretty awful. More borrowing, at a time when the cost of borrowing is so high, is horribly expensive. If she raises tax on the highest earners, either directly or through instruments like Capital Gains Tax, she’ll limit economic growth even further. The top 0.1 per cent of taxpayers already pays more than the bottom 50 per cent. Squeeze these people any harder, and they’ll simply leave the country at an even faster rate than they already are, taking their tax contributions with them.

And so Reeves has backed herself into a corner where she feels she must raise taxes for hard-working people – something that she explicitly promised not to do in Labour’s manifesto last year. (They have done this already, of course; it is absurd and insulting to suggest that, for example, farmers are not ‘working people’ – but not yet touched VAT, income tax or NICs, including freezing thresholds.)

But Rachel Reeves should have known about this already. She’s been a Labour MP since 2010, and a Labour member since she was sixteen years old. She should have known that her Labour colleagues would never allow her to seriously tackle spending, or remove regulation to let people get on with making money. Without being able to do those things, it was always wrong to promise not to raise tax.

Thus, she was either lying when she made the promise initially, or is so incompetent that she genuinely believed that she wouldn’t need to. Either way, she should resign. Instead, she’s taken to blaming Brexit (which happened six years ago after a referendum a decade ago, but she apparently didn’t know about until early 2025) for the country’s fiscal picture being worse than she expected. Give me a break.

None of this is to say that the Conservative record on the economy is perfect, and if we’re to win back the public’s trust on the economy, we must be honest about the times when Conservative chancellors made the wrong calls – not least in the case of Liz Truss’ disastrous mini-budget.

But as we look ahead to the budget, we should also recognise that we have a positive case to make to the British people. The solutions that the country needs are Conservative. Getting spending under control, letting hard-working people keep more of what they earn, getting out of the way of those who want to take risks and build things – this is what the country needs. The fact these options are not available to Reeves is nobody’s fault but her own.