The clash of Mary, Queen of Scots, and England’s Elizabeth I has given rise to dramatic interpretation since the 16th century. And now, in its competing visions, colliding of loyalties, twinges of envy and jockeying for sway, it serves well as a model for the competitive relationship between Rachel Reeves and Angela Rayner.
The Chancellor is battling competing pressures on public finances and is guaranteed to alienate one demographic or another by any moves she makes.
The forthright Deputy Prime Minister, meanwhile, has a markedly different conception of political economy and a vehement support base in the party ranks and among restless MPs who have tired of the “fiscal discipline” Reeves imposed to get Labour elected and restore “trust” in the party on economic management.
Most complicated battles over tax and policy are essentially about very human differences and interpretations of what is possible – and who should pay for it.
When I encountered Reeves recently, both on her visit to the US to smooth the path to a UK trade agreement and last week at the UK-EU warm-up summit in London – the vibe was pretty clear. She is restrained, highly disciplined, a tad anxious about unscripted encounters and with a support team engineered to repeat that there is no thinkable alternative to a restricted spending diet and some swingeing welfare cuts alongside cunning raids on middle-class savers and taxpayers to fill the “black hole” in the public finances.
Except it turns out that alternatives are being put forward, because in politics and public finance there always are different ways of doing things if the incentives to change, or risks of not changing, arise.
So the big, difficult conversations arise from exactly that view: that there are different ways to run public finances than the Chancellor’s diet of options. This is also the first moment of real challenge to the idea of Reeves as a sort of economist superwoman of unparalleled insight. Messages like the “£22bn black hole” have ceased to resonate.
Angela Rayner and Gordon Brown have reminded the Government and the rest of us of the awkward fact that there are choices which may need to be made in the run-up to the next Budget. Rayner does not run into Treasury affairs, so what we are seeing now is effectively a land invasion, carried out by allowing the presentation of a large set of alternative (aka tax-raising) ideas presented to the Chancellor to be leaked to the press. These things do not happen by accident.
Rayner is a consummate political actress, but even she could not easily pull off the poker-faced feint yesterday on TV that she “does not want to be Labour leader”. On the contrary, as one Starmerite supporter acidly messaged me, “She would like to be PM and Chancellor – and she sees the moment to change the course of this government.” That elicits a fierce response from those who believe that the party needs to be careful of tacking to “old left” ideas on soaking the rich.
Reeves prefers tunnelling into tax thresholds and savings allowances – like the possible restriction on tax-free ISA gains – because the impact is spread more thinly. But this approach cannot easily see off the back-seat drivers emerging all over the place.
Brown has intervened in the winter fuel backlash. In barely coded language, he said the Government needed to get rid of a winter fuel cap applied at too low a level. Starmer promptly did, but it’s interesting that Brown got there before No 10 could seize the initiative.
Now the Prime Minister is reportedly demanding a change in the limit on the “two child” benefit and tax credit cap, which affects low-wage or unworking households with more children. It is a classic argument about where the penalties of restricting state support hits the pain point of how Labour sees its values and commitments.
Taken together, Reeves is in a vice, operated by many of her own colleagues. The bigger challenge is that the next big “fiscal event” – the Budget – is going to reset expectations and priorities. She needs to re-establish her authority – and a clearer message of the politics of public finances, as well as the arithmetic of the Treasury books to satisfy the whims of one party wing or another.
The most sluggish bit of the Government’s agenda, however, is that it now has to rely on an “everything has changed” set of excuses to its “fiscal discipline” plan, when the things that have changed – from the impacts of Trump 2.0, to the war in Ukraine and defence spending challenges – were already in prospect.
So Reeves is not so much a bad Chancellor as the figure taking most of the strain, now that the fog of illusion has lifted around the Starmer economic project. But if she does not regain the initiative and a more punchy way of communicating that she is the Government’s economic and financial boss – and not the various Labour “shareholders” – she will surely take the blame.
Anne McElvoy is executive editor of Politico and co-host of the Politics at Sam and Anne’s podcast