Rachel Reeves is making mischief for the Tories

Rachel Reeves has a busy day: the shadow chancellor is giving her big speech tonight, where she is expected to outline the broad brush of her economic policy and claim there is a ‘new chapter in Britain’s economic history’ just waiting to start under a Labour government. Reeves was in the Commons this morning for Treasury Questions, and her focus there was on whether the Tories had a sequel planned for their own National Insurance policy.

As I reported from the Commons yesterday, Labour has decided that it’s worth exploiting the suggestion from senior Conservative figures that they would like to abolish the ‘double taxation’ of National Insurance. Today, Reeves asked the Chancellor Jeremy Hunt whether he had asked the Office for Budget Responsibility to cost ‘the government’s unfunded plan to abolish National Insurance’.

Hunt didn’t exactly answer the question – though it’s worth pointing out that he didn’t need to because he didn’t announce that the government was abolishing National Insurance in the recent Budget: it’s only an ambition that he and Rishi Sunak have been stating for the future. Instead, he used his party’s attack line that Labour is always changing its mind about where it stands on key issues, saying:

‘I am very glad that the right honourable Lady asks about National Insurance cuts, because first she supported them, then she abstained in the lobby, and now she appears to be against them – like the bankers’ bonus tax, which she was strongly in favour of and then strongly against; like £28 billion of borrowing, which she was strongly in favour of and then strongly against. Is not the actual truth that, where Labour should have an economic policy, there is just a black hole filled with platitudes?’

Reeves then quoted Kwasi Kwarteng saying that governments had to show ‘at least partially’ where the money was coming from to cut taxes, and pressed Hunt to tell her whether it would come from the NHS, the state pension, public services, or ‘increasing taxes, including for pensioners’, or borrowing. Hunt replied that:

‘Even Torsten Bell from the left-leaning Resolution Foundation said that the right hon. Lady’s argument that this was a mini Budget-style black hole was nonsense, because we specifically said that we would not fund national insurance cuts from increasing borrowing or cutting spending on public services.’

Reeves is being mischievous here because the government is not currently abolishing National Insurance: ministers have merely started to suggest that they would like to. There are two reasons why the shadow chancellor wants to suggest that this is, in fact, active government policy: one, it scares people now, and two, it prepares people to react badly if the Conservatives then make removing the ‘double taxation’ a manifesto pledge.

Labour must answer exactly the same questions on how it will fund the tax cuts actually announced so far – or whether it will cut public spending elsewhere in order to meet its own pledges on the NHS and school breakfast clubs. So it is also a defence mechanism. It will be interesting to see how much of Reeves’s speech tonight is defensive, blaming the Tories for ‘maxing out the credit card’ and making unfunded tax cuts, and how much of it is proactive and upbeat.