| Hi there, I'm Ailbhe Rea, a Bloomberg UK Associate Editor based in Westminster. Keir Starmer is on his way back from what he'll view as a successful trip to New York, where he dined with Donald Trump, addressed the UN, confirmed £1 billion of investment into the UK and shook hands with more world leaders that I can list. But the problems he was facing before he left are still waiting for him at home. The stories of freebies, infighting, and donor rows that overshadowed the start of the week continue to rumble away. As I, Alex Wickham and Ellen Milligan reported on Wednesday, Starmer's allies at the Labour Party conference were privately lamenting a lack of domestic political direction coming from Number 10, and urging this very new prime minister to get a grip on things. Into the vacuum of recent months has stepped Chancellor Rachel Reeves, whose gloomy narrative on the economy has dwarfed other policy messaging. One Downing Street official told me they believe the Treasury team was simply more prepared than Number 10 when Labour entered government. That allowed her speech on the £22 billion budget black hole and her controversial winter fuel allowance cut to become the defining message of the new government, with no offsetting political story from Number 10.  Keir Starmer meets US financial sector bosses in New York. Photographer: Alex Morales/Bloomberg The winter fuel cut — which was rejected by a symbolic vote at the Labour conference — has left MPs and ministers especially bruised. There's a consensus emerging among the Labour aides and politicians I speak to that the new chancellor was bounced into a bad political decision by Treasury officials, which Number 10 failed to stop. Surprised by the extent of the backlash, the government also felt it couldn't U-turn on one of its first policy moves. (Reeves' public line is that there was a need to make in-year savings so the cut had to be announced before the summer recess). Since Starmer set off for the US, there's been yet more evidence that this messaging has damaged consumer confidence. And we saw yet more frantic rowing back on the gloom narrative in New York. But the back-pedaling will have a limited impact until we know what's in the budget, which is still five weeks away. Already the great game of bargaining and expectation management has begun. We revealed on Tuesday that Reeves is considering a childcare package as one of the rabbits to pull out of the hat in her budget (despite pushback from her allies that there's no money for any "big" package). There has also been a lot of coverage of the windfall she might get for investment in the climate transition by tweaking her spending rules. Still, recent news about the possible fate of the non-dom tax regime sounds a note of caution about the spending plans. As the Guardian first reported, the chancellor now fears her plans for the toughest possible scrapping of the regime will fail to raise any revenue. And my colleague Joe Mayes hears that Reeves is considering watering down her non dom plans, to try to squeeze out the maximum amount of revenue.
It is certainly in Reeves' interests for stories like that to appear — and dampen expectations of a spending spree — just as we begin to report on the areas where she is considering allocating more cash. Want this in your inbox each weekday? You can sign up here. | 
No comments:
Post a Comment