The Iron Chancellor? Can Rachel Reeves Ride Out The Storm As Budget Criticism Grows?

According to friends, Rachel Reeves is maintaining her sense of humour as she endures growing criticism of the decisions she has taken since becoming chancellor in July. She is certainly going to need it in the years ahead.

In barely four months, Reeves has managed to anger millions of pensioners, Britain’s farmers and some of the country’s biggest employers as she seeks to repair the public finances.

It seems that voters have noticed. Polling by Savanta seen by HuffPost UK found that the chancellor’s approval ratings have plummeted since the election, while Labour’s lead over the Tories on who is most trusted to run the economy has fallen dramatically.

However, Reeves seems determined not to row back on any of the controversial decisions she has taken in the past four months.

She had hardly got her feet under her desk at the Treasury before she announced that the winter fuel payment, previously a universal benefit for every OAP in the country, would instead be means tested.

At a stroke, 10 million pensioners were told they would no longer receive it - a move which the Department for Work and Pensions admitted this week will push 100,000 of them into relative poverty.

Reeves justified the decision by saying Labour had to make a start on filling a £22 billion black hole left by the last Tory government, but that did not shield her from the political backlash which followed.

Undeterred, she doubled down in the Budget last month, closing a loophole which saw farmers exempted from inheritance tax, while hiking the employers’ rate of National Insurance.

The unpopularity of those decisions was shown in the past week, with thousands of farmers protesting on Whitehall, while some of the UK’s biggest companies putting their names to a letter warning that the NI changes will cost jobs and push up prices.

But despite the criticism, there is no indication from the top of government that any U-turns are on the cards.

A Labour source: “Rachel promised at the election she would be an iron chancellor that would put the economy back on track - and that’s exactly what she is doing.

“We have always said that there would be tough decisions to clean up the mess we inherited, including the £22 billion black hole in the nation’s finances. If we duck those tough decisions we will be doing precisely what the Conservatives did: party first, country second.

“But Rachel is equally clear about the prize on offer: a Britain that is better off. That’s why the Budget was all about delivering for working people: fixing the NHS, rebuilding Britain and protecting people’s payslips from higher taxes.”

Another senior insider told HuffPost UK: “Rachel is patient, shrewd and has confidence in herself and the people around her.

“People shouldn’t mistake her calmness and that rational approach for a lack of ambition for the government and the country, or an unwillingness to be bold.

“She had a shaky start with the winter fuel payment announcement but she’s learned from it that presentation and follow-up is key, which is why the Budget was so well-managed at every stage.

“Undoubtedly there will be choppy waters ahead, but I couldn’t think of anyone better to be at the helm to steer the government and the country through.”

Nevertheless, there are some in government who despair at Reeves’ determination not to plot a difference course, regardless of the political headwinds she is facing.

They point out that previous chancellor, such as Gordon Brown, Nigel Lawson and Philip Hammond, all showed a willingness to change their minds when the situation demanded it.

Reeves’ decision to put Darren Jones, the chief secretary to the Treasury, in charge of the “phase one” spending review outlining departmental budgets for the next 12 months, has also drawn criticism.

HuffPost UK has been told that Jones’ “high-handed” manner in one-to-one meetings when outlining where the axe would need to fall angered virtually all of his cabinet colleagues.

“You will not find a single minister, with the possible exception of Wes [Streeting], who has a good word to say about him,” said one senior figure.

It is essential, government sources say, that Reeves herself is at the helm of the three-year spending review which is still to come, rather than her deputy.

Some in cabinet are also worried at the apparent lack of an overarching strategy for achieving the economic growth which is meant to be the government’s number one mission.

At a recent cabinet meeting where it was discussed, there was surprise that science innovation and technology secretary Peter Kyle, and business secretary Jonathan Reynolds, were given star billing.

“It seemed very thin,” said one minister. “There wasn’t a lot that seemed different from what the Tories have been doing for the last 10 years.”

Support for Reeves in government remains strong, however, and there is no doubt that she has the full confidence of her next door neighbour, the prime minister.

One ally said making so many unpopular decisions in her first few months in government was smart politically and economically.

“This is year one and people need to be reminded of that,” he said. “This is the first year of what will be a long parliament and it will undoubtedly be the most difficult year.

“They’re having to make difficult decisions and they’re determined that that is the right thing to do for the economy, but also politically it is the right strategy because you’ve got to do the difficult stuff now, right at the beginning, if you want to see an economic and political recovery in four years’ time.”

Former Labour MP Michael Dugher, one of Reeves’ closest friends in politics, said: “She gets called the iron chancellor because she is seen as someone who is very tough and firm to deal with, and determined to get the public finances back in shape and create economic stability.

“But what she really needs is an iron skin because she is very much on the front line of the receiving end of a lot of the attacks on the government - whether it’s from Conservatives who still haven’t got over losing the election, or from the Left, who think Labour leaders as there to betray them.”

It is undoubtedly the case, however, that many more unpopular decisions will need to be taken by Reeves between now and the next election in four years’ time.

Having already burned through so much political capital, the pressure on her to bend will only increase if growth remains anaemic and the opinion polls do not improve.

How she responds will determine whether the iron chancellor tag is a deserved one or not.