Budget 2025: ‘Rachel Reeves Bakes an Economic Pudding With No Theme’

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“This pudding has no theme” was a Churchillism that could be applied to budgets as well as desserts. Because while Rachel Reeves’ Budget on Wednesday was in many ways progressive it tells us little about why the Chancellor, or the Government, want to be progressive, where they are taking us, why or how.

Mrs Thatcher once remarked that “It is only on the basis of truth that power should be won or indeed can be worth winning”. It’s a quote that comes to mind as we look at how this Government has descended, despite its huge majority, into survival mode.

Running the state in the 21st century is hard, the poly-crisis of economy, environment, technology and geopolitics create untold pressures and challenges. No one should just stand on the sidelines and claim it’s easy.

But given the complexity and scale of these challenges and more, how on earth could it happen that a Government can come in with so little scrutiny and having done none of the deep thinking and preparation to manage these issues and more?

Again, let’s be considered. It is not as if everything can be solved overnight. It’s not that progress on the economy or public services we’re going to be easy or quick. Meaningful change takes time. We need a politics that is pragmatic in the best sense of the word – a clear sense of direction, and an openness and patience in terms of making progress.

But this Government came in with nothing except an overblown sense of their own ability to make decisions on the hoof. All the country needed, they seemed to argue, was the return of ‘the grown-ups’ and all would be well. They would make the right sound judgements on a case-by-case basis. They would know how to tweak the system to optimise outputs. If ever governments did work like this they they don’t anymore. There isn’t a lever or a dial in Downing Street or the Treasury that you can simply pull or turn and make the world a better place. It’s all densely complicated. And to deal with that complexity you need people on your side willing to help and to shape and enact the decisions you make.

The Good News in Rachel Reeves’ Budget

From lifting hundreds of thousands of children out of poverty, to taking on the media-backed gambling lobby, there was much to praise and far less to criticise in the Chancellor’s annual statement, argues Adam Bienkov

Adam Bienkov

The Institute for Government recently reported that Keir Starmer is failing to make major improvements to public services partly because he did not plan properly while in opposition. Wes Streeting in particular is singled out for his “chaotic and incoherent approach” to NHS reform. This picture is mirrored on the economy where a fund manager looked at the impact of the new Government on the bond market and concluded “There is no plan, there is no vision, and they are not going to succeed because they do not have the talent”.

You can’t be competent, if you don’t know to what purpose. A Government that has no direction and no method was always bound to fail. The Prime Minister is of course a barrister, but what works in the courts was never going to work in the country. You can’t just read the brief provided by a civil servant as he might have done in his chambers – and make technical decisions accordingly. It doesn’t matter how much he promises to try harder if he has no idea what good looks like and doesn’t know how change happens in the 21st Century.

The decision, at least for now, not to raise the overall level of income tax in the Budget is an example of this shambolic approach. First, they should never have ruled out tax rises before the last election and put such naive promises in a manifesto. The Conservatives had already won Labour the election, so they were just ensuring that either the economy would suffer if they didn’t put up taxes if they really needed to, or democracy would be damaged further by breaking such categoric pledges.

And now they dramatically rolled the pitch just a week ago to prepare for the very thing they promised not to do, but then rowed back. And their incompetence spooked the markets and increased borrowing costs. Meanwhile they had been hypocritically charging MPs with recklessness because talk of any leadership challenges might upset the bond market, in the way they now have. It’s a circus, and it’s Labour, the government and our democracy which will pay the price. While only Reform and possibly the Greens will benefit.

There will be more talk of a change of leader, but unless that person completely changes the party’s direction, then it really is deck chairs on the Titanic stuff. Taking our lead from Mrs. Thatcher – who knew how to win and wield power, there are three lessons to be learnt. First, power should always be gained for a purpose, otherwise it’s not being in power, it’s just being in office. Second, means always shape ends. The narrow hyper-factional culture they have relied upon creates a brittle, rigid and narrow governing style when what is needed is breadth, openness and agility. And third, there are no shortcuts in politics, it’s a long, hard pragmatics slog in which you need a lodestar and friends. Lots of them. As soon as Starmer announced there would never be any such thing as Starmerism and therefore no Starmerites his days were numbered.

It’s hard to watch people’s disappointment as their hopes of something much better, after 14 years of terrible Conservative government, are dashed. Labour won in 2024 by default, and they simply didn’t do their homework. No amount of time or goodwill was going to change this. It was never going to work. The difficult trick in life as Italian political strategist Antonio Gramsci told us is “to live without illusions, without being disillusioned”. It’s a difficult balance to strike. But as we inevitably go back to square one of building the intellectual, organisational and cultural foundations, with a new leadership, to stop Reform and the causes of Reform, it’s a balance we need to get right.