The chancellor has the worst job in government

New European

04-06-2025

Rachel Reeves is undoubtedly doing the job at a difficult time. Fourteen years of Conservative government left both the public finances and public services in a parlous state. Fixing the former requires a tight grip of the purse strings, while fixing the latter necessarily means loosening them. To make things worse, the disastrously brief reign of Liz Truss showed the perils of testing whether markets would tolerate a chancellor taking a chance with the public finances – and the markets resoundingly said 'no'.
It is a wonder that anyone wants to be chancellor – and have no doubt, hundreds of MPs would chop off several fingers, perhaps even their own, for a chance at the job – because it is surely the worst job in government. You are near the apex of political power in the UK, and your job is to say 'no' to all of your colleagues and then explain to the public why they can't have nice things.
That leaves the chancellor walking a dangerously narrow path, trying to find enough money to deliver the improvements her government has promised the public, without allowing the public finances to tip into a fresh crisis. Thanks to changing the fiscal rules, next week she will announce some £100bn in new investment over the next five years – new roads, rail, infrastructure of all sorts, as well as new defence spending.
But this is likely to be overshadowed by reports of fresh rounds of austerity in key spending departments in their day-to-day finances. Labour is fighting mightily to make sure no-one uses the 'austerity' word, but this will surely be in vain. Spending cuts by any other name land just as uneasily with Labour MPs who feel this was the opposite of what they came into politics to do.
No-one should suggest Rachel Reeves has an easy job, nor that she's been doing nothing – but a week out from revealing her spending plans, she has certainly made it easier for those who can't see any sense in what she is doing.
Speaking on Wednesday, Reeves recommitted herself to her fiscal rules, to not raising VAT, income tax or national insurance, and to promising that the major tax hikes of her first budget are a 'one off' – and by implication, she committed herself to budget cuts across the next few years, too.
This is certain to cause despair in policymaking circles, as well as on her own benches. Reeves's plans barely meet her rules, to the point that even just six months after her first budget she had to scrabble to find billions more in cuts or extra spending to meet the updated forecasts.
Even in normal times, Reeves could expect to have to do the same twice a year for the rest of parliament, but these are not normal times. For one, the US president attempts to upend the rules of world trade several times a month. Despite all this abnormality, Reeves is trying to govern like a peacetime chancellor during a period of steady growth.
More than that, if politics is the art of the possible, Reeves seems determined to ensure the range of what is 'possible' is narrow: in the first year of a government with a landslide majority, she has ruled out any kind of major tax reforms. Council tax doesn't work, isn't fair, and hasn't been reassessed since 1991, but Labour won't touch it. National insurance is unfair and benefits rich pensioners at the expense of poor working age adults, but it won't be touched. The interaction of the income tax and benefit systems is a complicated mess, and again will be left unreformed. Social care has been punted until the next parliament.
Labour will never have an opportunity like this to fix some of the big challenges facing the British state, and Reeves and Starmer are making a deliberate decision to duck every hard decision. That leaves them tinkering around the margins, trying to make the sums add up, without changing anything fundamental.
That is a choice they are free to make, of course, but it is the exact same choice as was made by their predecessors in government, and is likely to turn out just as badly. There is a truism in Westminster that Labour has no shortage of policies, but no overarching vision. With her approach to the Treasury, Reeves is ensuring that no vision can emerge, either – ministers will have to dream small, and hope they can do better than the last government with good intentions, and a little more capital spending.
If there is such a thing as Reevesism, it is putting your head down, trying to make no mistakes, and hoping something comes along to make things better. There are surely worse philosophies, but it is not the stuff of which history is made. Unless Reeves is very lucky, it will not be enough to keep her in the Treasury for five years, either.