The Budget must give people hope

The Starmer team knows it cannot succeed by offering voters no short-term improvements.

Illustration by Jonathan McHugh / Ikon Images

It is not, really, about the Budget, this great, complicated, fractious argument roiling through the media and Labour Party; it’s about our common future and the ability of democratic politics to reshape a battered, increasingly demoralised nation.

The tax, spending and investment decisions to be announced by the Chancellor are, in truth, the best bet by the British state, now under social democratic control, about what is possible. They are essentially a gamble about the behaviour of markets, taken by the government of an important, not gigantic, economy which wants to restore the public realm.

To confuse matters, everyone is treating state vs markets as a crude, zero-sum game. Give workers better pay and conditions, and you will destroy growth. Alternatively, better pay and conditions are essentially the same as growth. The simple truth is that there are complex, nuanced trade-offs everywhere. You don’t want to change the tax system, for instance, in a way that suddenly spooks business owners into selling up. But they know, deep down, that more contented workers are better consumers and produce higher productivity.

In the Treasury, they are agonising about trade-offs all the time. Outside it, every possible tax rise is presented by an unforgiving media as catastrophic, disastrous, intolerable… with nary a word about why they might be needed.

What matters is not Budget theatrics but the direction of the country: and in this argument, it has been as if the public realm is almost voiceless. But entrepreneurs and big, self-certain corporations, all lawyered- and editored-up, can’t survive without an effective and properly funded state. They need healthy, energetic and well-educated workers. They need public spaces that are not crime-ridden. They need smooth, whizzy transport. They need, surrounding all that, a market that feels secure enough from overseas threats to ripple with risk-taking optimism.

For too long we were encouraged to believe we could live in a well-ordered, well-defended and civilised country without paying as much money for them as other nations did. The state and its defenders were sold as essentially bad actors – and if you think that’s an exaggeration, look at how Kemi Badenoch is conducting her Tory leadership campaign.

In this summer’s election the proposal that the state was somehow “other” and could be left to decay was at last cast aside by a despairing public. Filthy rivers, disordered streets, inhumane waiting lists – we had had enough. Yet now, in this unbalanced pre-Budget argument, it seems as if the British discourse is reverting to type. Britain hungers for “rebuilding” but won’t pay for bricks.

The Starmer government has so far been poor at making this underlying argument about purpose. Yet I see in the turmoil preceding the Budget the faint outlines of a major political shift, not yet properly analysed.

Those cabinet ministers challenging Rachel Reeves over departmental spending cuts were guilty of indiscipline under fire by leaking their complaints to the press – but their arguments were not all wrong. Angela Rayner, Louise Haigh and Shabana Mahmood were making the case for housing, investment in transport, and a criminal justice system that functions properly – they briefly became the voices of those public services.

In the short term their challenge to the centre failed – as one Downing Street figure told me, “If they thought they could divide us, they did not understand Keir Starmer and his relationship with Reeves.” As a result, the entire departmental spending deal was settled on the evening of Friday 18 October, earlier than usual for a Budget.

But inside the centre, the reaction was thoughtful: the Starmer team understands it cannot succeed by offering ordinary voters no short-term improvements. The result has been a fast rebuilding of the position of Rayner. Her workers’ rights and housing agendas are seen in Downing Street as crucial to getting money to working people while the longer-term investment programme uncoils. She is admired for being able to reach voters other politicians can’t, and her personal story is seen as the perfect example of social mobility in action.

So she has won a boost for that traditional Labour cause: council housing. Alongside Reeves, she is being hugged close by Starmer, on the key committees, in a way that wasn’t the case a fortnight ago. With Pat McFadden, Morgan McSweeney, Starmer and Reeves, she is now at the centre of the centre. For the tone and politics of the still-young government, this feels like a significant shift.

Many Labour MPs, however, still share the protesting ministers’ fears about a public spending review which could feel like austerity. I was surprised by the hostility to the Chancellor and Prime Minister, which was being privately voiced by MPs I’d had down as loyalists. Getting-to-know-you drinks and sandwich events organised by Starmer’s office are coming not a day too soon.

The pressure on Reeves is complex and vice-like. Her departmental spending dilemma is the consequence of rash election promises, yes, but also long years of decline. I’m reminded of Denis Healey on a previous difficult Budget when he was contemplating a pay policy. That, he said, was “rather like jumping out of a second-floor window: no one in his senses would do it unless the stairs were on fire”. But, he added mordantly, “in postwar Britain the stairs have always been on fire.”

After weeks of impossible choices and away from the smoke, Health Secretary Wes Streeting is the big winner. As the Chancellor made clear to me in her interview last week, health is at the heart of her Budget spending plans. Again, this is good politics. At a time when there isn’t the fiscal firepower to make a noticeable change in every direction, Starmer had to pick something to demonstrate early progress.

If he has an unofficial motto for his Downing Street, it’s: “Show, don’t tell.” Health is the obvious area for showing, and a clear fall in waiting-list times is where Labour can give the public a glimpse of wider changes that will be possible in time elsewhere. But this is also about storytelling. Streeting is being put into the media hot seat more and more, because he brims and fizzes with confidence. Watching his recent media rounds, I found myself concentrating on his tone, and the way he sits, as much as his actual words: he has a “we can do this, we are going to do this” projection that is, right now, just what the government needs. But if he fails, the government fails.

More than that, reshaping the conversation is ultimately the job of the Prime Minister and the Chancellor. Starmer was always going to become a much more foreign affairs-focused premier than he wanted, but this has happened quickly and overwhelmingly.

In the meantime, that leaves Reeves with the job not just of fixing the finances but also reassuring a confused country and a jittery party, full of MPs who now expect to lose their seats at the next election, with all the psychological adjustments that means.

She needs to begin her Budget speech not in the traditional way but with a rousingly patriotic, optimistic assessment of Britain’s strengths and future; a real sense that the Budget is a historic turning point, not more of the recent same. It is apparently untrue that the darkest hour is just before the dawn, but that’s the sentiment the country needs.

Even in a media landscape so worm-eaten by dishonest and hysterical interventions, the public is logical and mostly calm. A clear reminder of exactly why tax increases are needed – and that decline is absolutely not inevitable – can still cut through.

[See also: Keir Starmer and the perils of consensus]