by Rachel Reeves is under fire from the Labor backbenches who say her Budget is “impossible to sell” to her “horrible” people.
The Chancellor promised that his initial fiscal statement would boost growth and “fix” the “foundations” of the economy.
Publicly, Labor MPs have been at pains to show how happy they are with the package Rachel Reeves unveiled last week – from their cheering and waking on the green benches after the Chancellor’s speech brought in the Chamber, to the lonely atmosphere when Ms Reeves questioned hundreds of the party’s Dáil Deputies in the committee room on Wednesday.
One moderate MP from this year’s intake described the post-Budget meeting with one word: “Euphoric.”
But in private, Ms Reeves’ Budget, which featured the biggest tax rises in a generation and the biggest increase in borrowing for many years, prompted a fierce outcry.
A senior Labor MP told the Telegraph: “It’s been very badly received within the Labor party. You just compare what the OBR [Office for Budget Responsibility] saying against what the front bench is arguing – it is in stark contrast.
“It is possible that it will not be a ‘growth Budget’ as claimed, but there is all the evidence that there will be no more growth in the end. And more effective taxes will certainly pay for working people.”
In a blow to Mr Reeves, the Government’s fiscal watchdog has cut its growth forecasts for most of this decade as its spending spree paves the way for higher interest rates and mortgage costs.
The OBR also warned of a two-year squeeze on living standards as the pain of the Chancellor’s £40 billion tax raid is reflected in lower wage growth.
A promise to protect “working people” from higher taxes was one of the main promises of the Labor Party during the election campaign.
Now even staunch Starmerite MPs are left struggling to explain to voters why the OBR found that millions of workers will suffer from its Budget tax raid.
“I’ve been talking to my agent and other members of the Labor party – people are scared about it,” said one MP, saying the Budget was an “impossible sell” to voters, “partly because it is framed by the winter fuel allowance. cuts as well as all the cheap clothes of the Cabinet Ministers.
“It’s a trivial point but people remember that – and at the same time they’re either paying more tax or getting paid less.”
The OBR found that workers will pay for 80 per cent of the Chancellor’s increase in employer National Insurance in the long term through lost pay rises.
Labor MPs who instinctively want to support the Budget, and who agree with key policies such as boosting NHS funding, admit that there are issues with the overall message.
Another man said: “I don’t think any plan will survive touch with reality… things start to unravel. There is no qualitative component, which makes me feel warm inside.
“Who is telling that story about what this Budget will mean for my constituents on the doorstep? Someone has to come out and tell this story. Since Keir Starmer was in power, we didn’t know what the story was.
Some on the left of the party have given more mixed judgements, pointing out that tackling poverty and inequality was often a central theme of even Gordon Brown’s budgets in the New Labor years – but this was not lacking in narrative Ms. Reeves.
Another MP said: “Colleagues noted that the Budget did not really talk about poverty and inequality. I wonder what will have happened to inequality and child poverty in five or 10 years’ time, because these are the things you are branding the Labor government on.”
On X, Liverpool MP Kim Johnson hailed the Budget as “a step in the right direction” but said it was a “missed opportunity to bring about real progressive change and redistribute power and wealth”.
She specifically criticized the increase in bus fares and the decision not to raise the cap on two-child benefit, arguing that these decisions “punish people on the lowest incomes”.
Nadia Whittome, a left-wing MP, called for a rise in capital gains tax but said: “We must go further next time to tackle the UK’s deep inequality.”
The former chancellor John McDonnell, who is considered by the people on the left to be an authority on the economy, also criticized the Budget.
He posted on X: “I fully understand why the Chancellor has focused on tackling the crisis in our health service today, but if we don’t tackle poverty and thereby increase demand on our economy the we want economic growth.”
Mr McDonnell is currently suspended along with six other Labor MPs who defied the party leadership at the start of this parliament by voting to end the cap on couple benefits.
Some MPs are more concerned about the way things are going since Sir Keir Starmer came into Downing Street.
One person said: “After a lot of council by-election results, there are a lot of people in the PLP [parliamentary Labour Party] starting to worry about these huge swings against Labor at this point.
“We are worried about Reform in communities where people believe they have been abandoned by the state, where there could be a threat from the Far East. We are very conscious that Labor only got 34 per cent of the popular vote, and we think about where politics is going on the geopolitical scale with Trump etc.”
Labor has suffered a dozen by-election defeats in less than a month after facing the controversy over donations and freebies.
The party has lost council seats across the country to all parties since mid-September, a blow to prime minister Sir Keir in his first months in office. Labor has had a net loss of 11 councilors since 16 September.
Meanwhile the Conservatives have won four seats in the same period and Reform has won two.
For the more savvy Labor MPs, the Budget provides an opportunity to “reclaim confidence” after a dismal start in office.
One of them said: “They gave themselves a fighting chance to reclaim trust after a very difficult few months – winter fuel payments, the two caps on child benefit and a large corporate – it was a toxic mix.
“There were some unnecessary mistakes and that added a multiplier of 10 to the corporate majority.
“This Budget so far – we’ll see what happens in the next few days – this has brought us back into the game.
“If before this Budget we were gasping for breath, and under the water, now the water is on our chins and our heads are just above the water. But we’re not sitting on top nice and pretty – I’d say we’re treading water.”
A Labor source said: “This was the first Labor government Budget in 14 years that will fix the NHS, rebuild Britain and protect working people’s payslips.
“It will mean fewer patients waiting on hospital waiting lists, more teachers in children’s schools, 1.5 million homes being built and the biggest boom in investment in a generation.
“The OBR has said it will deliver growth over the next 10 years. It’s selling better on the doorstep than it has for 14 years.”
