Tax, Stagnate, Repeat: Britain Can’t Afford Rachel Reeves

By now, you may have heard the phrase "Iron Chancellor" used to describe Rachel Reeves. It has been whispered – sometimes with admiration, sometimes with incredulity – by columnists, technocrats, and Labour’s own bright-eyed acolytes. But let’s call it what it is: nonsense. Perhaps, in a sense, we might certainly call Rachel Reeves the “Iron Chancellor” in that she is indeed profoundly, uncompromisingly dull.

This autumn, her second budget will land. And if her first was akin to a shrug in a pinstripe suit, her second looks set to be a full-frontal assault on economic vitality. Taxes will go up – again. The IFS warned us that she was but a whisper away from hiking them further. That whisper has now become a drumbeat. And behind that drumbeat is an even louder silence on what Labour actually plans to do for growth.

Let us stop deluding ourselves: Labour is not the party of growth. It is the party of inertia dressed as responsibility. It is the party of accountancy, not ambition.

The warning signs were all there. The first Reeves budget was the single largest tax-raising budget since Black Wednesday with forty billion pounds of extra burden placed upon individuals and businesses. Not only is every working household and British business now paying more, but they’re paying more in the clever, quiet ways that politicians use to truly dig deeper into your wallet: through stealth taxes, threshold freezes, and the consistent, slow boiling away of take-home pay. And what did we get in return? Speeches mostly, and the occasional slogan. At some point, I recall an Ed Miliband press release about something called "Great British Energy". To date, this has mostly meant bolting Chinese solar panels to the occasional council roof.

Now, the impending Autumn Budget threatens to double down on this madness. We face a staggering fiscal gap. The public finances are tight. But rather than look seriously at our grotesque and unsustainable welfare state – at the spiralling entitlements bill, and the bloated machinery of transfer payments with the economic torpor that they entrench – Labour is preparing to do what Labour does best: raise your taxes.

Why? Because the political calculation is simple: Labour would rather squeeze the productive than confront the unproductive. It is easier to guilt a small business owner than to reform Universal Credit. It is more fashionable in Labour circles to talk about taxing the rich than about unleashing enterprise. Growth is something they vaguely gesture towards, like when a football fan who only watches the World Cup explains the offside rule – vaguely familiar, but always a little foggy.

This isn’t the politics of prudence. It’s the economics of cowardice, and it will cost more than just money: it will cost optimism.

And if this cowardice persists, catastrophe beckons. The UK now finds itself eerily close to the same fiscal precipice it last approached in 1976: when a collapsing pound and runaway borrowing forced us to seek a $3.9 billion bailout from the IMF. Today, our debt is rising, our growth continues to underwhelm, and interest payments are ballooning. The IMF itself has warned that Labour’s fiscal rules could be breached “easily” in the all-too-likely scenario where growth disappoints or rate shocks hit. This is not some economic ghost story. It is our future, pending.

Britain is not short of ideas. It is short of oxygen. Those of us in the pro-growth movement – who still believe in entrepreneurship, innovation, and ambition – must now see Labour for what it truly is: not the ally we hoped it might become, but the obstacle we always feared.

So let’s leave Reeves to her tax raids and ongoing economic arson. Here’s what an agenda with real growth ambition would actually look like:

• Re-index income tax thresholds to wage growth and flatten marginal rates. Stop penalising the productive middle.

• Abolish the triple lock and replace it with a sustainable, generationally fair system that doesn't mortgage the future of under-40s.

• End the tyranny of council clipboards and twitching objectors – if we want homes, jobs, and growth, then we must unapologetically build, and not beg for permission.

• Scrap the IR35 and overhaul small business taxes: free the next generation of entrepreneurs from regulatory sludge.

• Permanently entrench full expensing for business investment – capital formation must become the norm, not the exception.

• Reform planning law to permit high-density, low-cost housing near transport hubs, universities, and growth zones.

• Devolve tax and zoning powers to dynamic local authorities willing to build and compete.

• Remove blanket pensioner subsidies – like universal winter fuel payments – and target help to those who actually need it.

• Stop subsidising stasis. Put the full force of the state behind youth enterprise, education, and productivity – not entitlements.

Yes, we must balance the books. No, it cannot be on the backs of those doing the building. It must come from the courage to make hard decisions about a state that has swollen far beyond what we can afford.

Labour won’t do this – because Labour can’t do this. They are too spooked by their own shadow, too afraid of the Guardian commentariat, and too beholden to the economic ghosts of days past and of days yet to come. Reeves’ obsession with fiscal rules is not prudence: it is plain paralysis.

So when this budget lands with all the excitement of an Excel spreadsheet, remember: it’s not a plan. It’s a warning. Growth is not coming. Investment will stall. Confidence will sag. And those of us who still believe in a future of abundance, freedom, and wealth creation must look elsewhere.

Fool me once, shame on you. Fool me twice – and shame on all of us for pretending that Labour was ever going to be any different.

Illustration: Will Allen/Europinion