Political Déjà Vu: Labour’s Fiscal Plan Tory Austerity

Labour’s Austerity Playbook: Echoes Tory Tactics

Chancellor Rachel Reeves has donned the sackcloth of austerity, meticulously arranging her rhetorical ducks in a row to explain why this Labour government offers no more change than a broken vending machine.

Echoing the ghost of George Osborne past, Reeves delivered a speech in the House of Commons that could have been plucked straight from the Conservative playbook circa 2010. With all the enthusiasm of a dental patient facing root canal, she outlined a £22 billion “black hole” in public finances, conveniently discovered mere moments after Labour took office. You can almost hear the collective eye-roll of a nation weary of political déjà vu it’s the note left to for the Tory treasury of 2010: ‘I’m afraid there is no money.’ It was a lie then and it’s a lie now.

Yet, Rachel Reeves tells parliament: “If we cannot afford it, we cannot do it.” Totally back to front. As Keynes said, “Anything we can actually do, we can afford.” A sovereign currency-issuing nation is limited only by resources, not money. A Labour chancellor should understand this…

Instead the new government’s solution to this fiscal apocalypse? A greatest hits album of austerity measures that would make even the most ardent Tory nostalgic. From scrapping the winter fuel allowance for millions of pensioners to reviewing the 40 new hospitals promise (spoiler alert: they won’t be built), Reeves has embraced the art of taking away with one hand while pointing accusingly at the previous government with the other.

But fear not, dear citizens! While your granny might be shivering through winter and your local hospital crumbling, rest assured that private school fees will now include VAT. You can almost hear the collective sigh of relief from the nation’s food banks.

Labour’s Budget Cuts Tory Tactics

The £22 Billion Black Hole

Reeves claims a £22 billion “black hole” exists in the country’s finances, with an additional £20 billion needed to prop up ailing services including the NHS, local government, schools, and prisons. This framing echoes the Conservative playbook used to justify austerity measures in the past decade.

Projects on the Chopping Block

The new Labour government has announced several high-profile project cancellations and reviews:

• The controversial plan to build a road tunnel on the A303 under Stonehenge
• A27 Arundel Bypass – a road upgrade in West Sussex
• Restore your Railways program (individual cases can be reviewed) – a project to restore closed rail lines
• Advanced British Standard – a qualification announced by Rishi Sunak
• Winter fuel payments (for some pensioners) – more here
• The New Hospital Project to be reviewed – this was Boris Johnson’s plan to build 40 hospitals by 2030, which was slow to progress

Social Care Delay and Pension Credit Changes

Planned changes to social care in England have been scrapped, drawing criticism from the Institute for Fiscal Studies. In a surprising move, the winter fuel allowance will now be restricted to those receiving pension credit or other means-tested benefits, affecting millions of pensioners.

From this year onwards only those receiving pension credit or certain other means-tested benefits will be eligible for the winter fuel payment.

Pension credit is a benefit for those over state pension age who are on a low income, external.

In August 2023, there were 1.4 million people receiving pension credit, external. About two thirds of people getting it were women.

But an estimated 850,000 eligible households aren’t claiming pension credit, according to the Department for Work and Pensions.

The figures, which were published in June 2023, external, show that up to £1.7bn was going unclaimed.

Around 10 million pensioners and seven million pensioner households will lose their winter fuel payment as part of an immediate cut aimed at raising £1.4bn.

She say it will help fill what the chancellor calls a “black hole” inherited from previous governments.

The £300 winter fuel payment – created by Labour Chancellor Gordon Brown in 1997 – will now be means tested.

Reeves earlier said she would try to “maximise the take up of pension credit”, by working with older people charities and local authorities to identify households not claiming it.
The charity Age UK says they “strongly oppose” the chancellor’s decision to restrict how many pensioners can claim the winter fuel payment.

They say that more than one in three pensioners entitled to pension credit don’t receive it and that around a million older people have weekly incomes less than £50 above the poverty line.

“With winter now just over the horizon, the government should halt their proposed change and think again,” says charity director Caroline Abrahams.

The Red Tory Resurgence

As we watch the supposed ideological divide between our two major parties crumble into dust, we must ask ourselves: what price democracy when the choice is merely between shades of the same failed ideology? When both parties kneel at the altar of neoliberalism, offering up the same sacrifices of public services and social welfare?

The zeitgeist of our age, it seems, is one of managed decline, of lowered expectations, of a populace trained to expect less and less from those who govern them. It’s a grim picture, painted in the drab colours of austerity.

Labour’s approach exposes the eroding ideological divide between the two major parties. The decision to maintain policies like the two-child benefit cap while pledging funds for international conflicts raises questions about the party’s priorities.

Let’s be clear: this isn’t real money we’re talking about. It’s the fiscal equivalent of a mirage – always shimmering on the horizon, always just out of reach. It’s a promissory note written on water, a cheque dated for the 12th of Never.

Economic Realities vs. Political Choices

Some economists argue that as a sovereign currency issuer, the UK has more fiscal flexibility than politicians admit. The constraints, they suggest, are more political than financial. The reality is it’s a political choice to bring about more austerity.

Public Sector Pay and Tax Increases

Amidst the cuts, Reeves announced above-inflation pay rises for public sector workers and confirmed plans to charge VAT on private school fees. The government also plans to replace the non-domiciled tax status and increase the windfall tax on energy companies, of course, that won’t bring down our bills and with the billions in profit they are making it just the bubbles off their Champagne.

Opposition Response

Former Chancellor Jeremy Hunt accused Reeves of “shameless” tactics, questioning the sudden change in financial estimates. Meanwhile, the SNP criticized Labour for “extending austerity” and breaking promises to voters.

The Road Ahead

As Labour sets the stage for its first term, many are left wondering if this is merely the opening act of a familiar play. With tax rises likely in the October Budget, Reeves and Labour leader Sir Keir Starmer are betting that by the next general election, these difficult decisions will be a distant memory.

In the arena of British politics, it seems the more things change, the more they stay the same. As Labour dons the sackcloth of austerity, the question remains: Is this truly a new direction, left or right, funny how we always seem to end up in the same destination.

It’s enough to make one wonder if there’s any real difference between our political parties anymore. They all seem to be reading from the same dubious script, promising phantom riches while pleading poverty when it comes to the essentials.

So where’s the money? It’s wherever political promises go to die, I suppose. In the same place as all those hospitals Boris Johnson swore he’d build, or the Brexit dividend that was supposed to fund our NHS. It’s in the land of make-believe, where the laws of economics don’t apply and where politicians can conjure billions with a wave of their hand.

The real tragedy is that while we chase these fiscal phantoms, real people suffer. Real communities decline. Real needs go unmet. But hey, at least we’ll have a slightly faster train to Birmingham, right? Assuming, of course, it ever actually gets built. Just one question, what happened to the billions saved by cancelling the rest of HS2?

In the end, it all comes down to choices. And time and again, our leaders choose the people as a necessity. It’s a damning indictment of a political class that seems more concerned with optics than improving the lives of ordinary people.

As the dust settles on this opening act of Labour’s governance, one can’t help but wonder if someone accidentally switched the scripts. The party that spent over a decade decrying Tory austerity now embraces it with the fervour of a convert, proving once again that in the grand theatre of British politics, the more things change, the more they stay the same.

So, as we brace ourselves for Act Two of this political tragicomedy, remember: it’s not about red or blue anymore. It’s about the same old story, just with different actors reading the lines. Welcome to the brave new world of British politics, where the only thing more predictable than austerity is the excuse used to justify it.