In 2002, the then education secretary Estelle Morris stunned Westminster by announcing she was quitting her job.
The fact of a ministerial resignation wasn’t particularly shocking – there had been many before and would be many more subsequently. What amazed MPs and journalists was the reason she proffered for her decision to step down.
‘I have not done the job as well as I should have done,’ she confessed, candidly, in a letter to prime minister Tony Blair. ‘With some of the recent situations I have been involved in, I have not felt I have been as effective as I should be or as effective as you need me to be.’
She concluded: ‘I have learned what I am good at and also what I am less good at.’
Today, Rachel Reeves is sitting in the Treasury putting the final touches to her Budget. Or she should be.
What’s she’s in fact doing – if the latest press briefings to are to be believed – is tearing up her Budget, frantically rewriting it, and desperately trying to pull together at the last minute something that might just pass for a credible fiscal and economic strategy.
According to this morning’s Financial Times, she has belatedly decided to U-turn on her decision to raise income tax.
Following a series of interventions from senior Labour MPs – including newly elected Labour Deputy Leader Lucy Powell – she and the Prime Minister have reluctantly concluded the political fallout from a breach of their party’s manifesto pledge would simply be too great.
Rachel Reeves’ 2025 Budget is the first in post-war British history that has managed to cripple the economy before it was even delivered, writes Dan Hodges
At the start of the year, the Chancellor said her priority was growth. But the £40billion tax burden she loaded onto the backs of business suffocated it
So she has opted to junk the central plank of her proposals and start again.
She should stop. There should be no last-minute rewrites, or back-of-the-fag-packet attempts to balance the books.
Instead, Reeves should have the self-awareness – and indeed, self-respect – to accept what her colleagues, her opponents, the country and the financial markets all now know to be true.
She is simply not up to the job of Chancellor. And she should step down before she does any more damage to her personal reputation, her party, and the nation she has been elected to serve.
There have been bad Budgets. There have been disastrous Budgets. There have been Budgets – such as the catastrophic Truss/Kwarteng statement of September 2022 – that have changed the political and economic trajectory of the United Kingdom.
But Rachel Reeves’ 2025 Budget is the first in post-war British history that has managed to cripple the economy before it was even delivered.
Yesterday, the latest growth figures were published. They showed a shock contraction.
The primary reason for that contraction? The economic uncertainty created by Reeves as she has floated, then rejected, a series of increasingly bizarre, contradictory and fiscally incoherent set of tax hikes.
Two decades ago, Estelle Morris had the courage and decency to recognise her own failings, it’s time for Reeves to do the same
She has trailed the idea of a tax on property. Which has promptly – and inevitably – led to the collapse of the housing market.
She trailed the idea of an ‘exit tax’ on rich foreigners who might want to flee abroad, which raised the prospect of a flight of wealth and intellectual capital from the UK.
She trailed the idea of a rise in the basic rate of tax for the first time in half a century. Which led directly to the further strangulation of the country’s already anaemic growth.
It is not unusual for chancellors to fly the odd kite in the months before a budget.
But Reeves has launched so many kites she has blocked out the sun. Then reacted to her blunder by manically opening up with a machine-gun in a panic-stricken attempt to shoot them all down again.
There is no longer any benefit for anyone in ignoring the obvious. Whatever political qualities Reeves has, they do not extend to the sound and steady management of the national finances. Since entering office, every decision she has taken – every single one – has had the diametrically opposite effect to the one she intended.
She attempted to balance the national books. And has instead driven borrowing and debt to record levels.
At the start of the year, she said her priority was growth. But the £40billion tax burden she loaded onto the backs of business suffocated it.
In November last year, in one of the most ill-judged and misguided public statements ever delivered by a holder of her office, she said this: ‘Public services now need to live within their means because I’m really clear, I’m not coming back with more borrowing or more taxes.’ In a fortnight, she is going to do precisely that.
Though to accuse Rachel Reeves of incompetent decision making is of itself to do her an unmerited service. Because the truth is that the Chancellor is no longer really making the decisions.
Her blunders have meant that, for months, she has effectively been in hostage to the bond markets.
She has also had her hands bound by her own backbenchers who, with their rejection of the Prime Minister’s welfare reforms, destroyed any prospect of getting to grips with spiralling Government spending.
Now, with a leadership coup imminent, she is looking over her shoulder, casting around for what she can do to placate the plotters preparing to make their move against Starmer. And by extension, herself.
Axing the two-child benefit cap is the means by which she will try to convince them to stay their hand.
And it will fail, just as surely as everything else she has tried has failed.
Six months ago the perception in the Cabinet was that Reeves was un-sackable. ‘A Prime Minister can’t ditch their chancellor without admitting their entire economic plan has been a failure,’ I was told.
Now the only discussion amongst Ministers is when Reeves will be axed and who will replace her. Darren Jones is the perceived favourite, with Welfare Secretary Pat McFadden another strong contender.
But whenever she is ditched, it will come too late – for the country and for her. One minister I spoke to expressed genuine concern about the toll the job is having on Reeves.
‘I’m worried for her,’ they said, ‘she’s looking terrible. The pressure is immense. I’m worried she might not be able to get through all this.’
She shouldn’t have to. Keir Starmer has a duty of care to his Chancellor, and to the country. And it is clear she is simply not capable of managing such a high-profile and highly complex brief.
It’s a disgrace that the Prime Minister has allowed this farce to continue, basically using Reeves as a human shield for his own failings and political ineptitude.
It was obvious from the very beginning that she was out of her depth. But political expediency, Labour’s unending obsession with gender diversity and an ideological unwillingness to accept fiscal reality have contrived to leave Britain economically ungovernable.
Two decades ago, Estelle Morris had the courage and decency to recognise her own failings. Rather than cling on, she did the honourable thing and put the needs of her country before her own personal ambition.
‘I’m not up to the job,’ she conceded.
It’s time for Rachel Reeves to admit the same. And if she won’t, Keir Starmer must compel her.