Reeves under fire from Labour backbenchers over ‘impossible sell’ Budget

Rachel Reeves had promised that her maiden Budget would boost growth and 'fix the foundations' of the economy
Rachel Reeves had promised that her maiden Budget would boost growth and ‘fix the foundations’ of the economy - UK Parliament/AFP via Getty Images

Rachel Reeves is under fire from Labour backbenchers who have said her Budget is “impossible to sell” to “horrified” constituents.

The Chancellor had promised that her maiden Budget would boost growth and “fix the foundations” of the economy.

In public, Labour MPs have been at pains to show how pleased they are with the package unveiled last week, with one moderate MP from this year’s intake described the post-Budget debriefing meeting as “euphoric”.

But in private, Ms Reeves’ Budget, which featured the biggest tax rises in a generation and the biggest increase in borrowing for decades, has prompted a fierce backlash.

One veteran Labour MP told The Telegraph: “It’s been received very badly indeed within the Labour Party. You just have to compare what the OBR [Office for Budget Responsibility] is saying against what the front bench are claiming – it is in stark contrast.

“The chances are it’s not going to be a ‘growth Budget’ as is claimed, but all the evidence is that it will have no more growth at the end of it. And it is certainly going to be paid for by higher effective taxes on working people.”

In a blow to Ms Reeves, the Government’s fiscal watchdog cut its growth forecasts for most of this decade as her spending binge paves the way for higher interest rates and mortgage costs.

The OBR also warned of a two-year squeeze on living standards as the pain of the Chancellor’s £40 billion tax raid is felt in lower wage growth.

Promising to protect “working people” from higher taxes had been one of Labour’s key promises during the election campaign, leaving MPs struggling to explain to voters why it is that the OBR found that millions of working people will suffer from the Budget tax raid.

“I have been talking to my agent and other other Labour Party members – people are horrified by it,” said one MP, adding that the Budget was “an impossible sell” to constituents, “partly because it is framed by the winter fuel allowance cuts as well as all the free clothes that Cabinet ministers have had.

“It is a trivial point, but people remember that – and at the same time they are paying more tax or getting paid less.”

The OBR found that workers will pay for 80 per cent of the Chancellor’s increase in employer National Insurance in the long term through lost wage increases.

Labour MPs who want to be supportive of the Budget and agree with key policies such as boosting NHS funding admit there are problems with the overall message.

Another backbencher said: “I don’t think any plan survives contact with reality... things begin to unravel. There is no qualitative component, nothing that makes me feel warm inside.

“Who is telling that story about what this Budget will mean for my constituents on the doorstep? Someone needs to come out and tell this story. Since Keir Starmer has been in power, we have never known what the story was.”

Some on the Labour Left have given more mixed verdicts, pointing out that even Gordon Brown’s Budgets in the New Labour years often had tackling poverty and inequality as a central theme, but that this was absent from Ms Reeves’ narrative.

Another MP said: “Colleagues noticed the Budget didn’t really talk about poverty and about inequality. We wonder what will have happened to inequality and child poverty in five or 10 years’ time, because these are the things that you mark a Labour government on.”

Writing on X, formerly Twitter, Kim Johnson, the Liverpool Riverside MP, praised the Budget as “a step in the right direction” but described it as “a missed opportunity to implement real progressive change and redistribute power and wealth”.

She criticised the raising of bus fares and the decision not to lift the two-child benefit cap, arguing that these decisions “punish people on the lowest of incomes”.

Nadia Whittome, the MP for Nottingham East, praised the raising of capital gains tax but said: “We must go further next time to address the UK’s deep inequality.”

John McDonnell, the former shadow chancellor, posted on X: “I completely understand why the Chancellor focused on tackling the crisis in our health service today, but unless we tackle poverty, and in that way increase demand in our economy, we will not secure the economic growth we need.”

Some MPs have broader concerns about the way things have been going since Sir Keir Starmer entered Downing Street.

One said: “After a lot of the council by-election results, there are a lot of people in the PLP [parliamentary Labour Party] starting to get worried about these huge swings against Labour at this stage.

“We are worried about Reform in communities where people believe the state has abandoned them, where there could be a threat from the far Right. We’re very conscious Labour only got 34 per cent of the popular vote, and just think about where politics is going on the geopolitical scale with Trump etc.”

Labour has suffered a dozen council by-election defeats in less than a month after grappling with a row over donations and freebies. The Conservatives have gained four seats in the same period, with Reform taking two.

For more upbeat Labour MPs, the Budget offers an opportunity to “claw back trust” after a shaky start in office.

One said: “They have given themselves a fighting chance to claw back trust after a pretty dire couple of months. Winter fuel payments, the two-child benefit cap and corporate largesse – it was a toxic mix.

“This Budget, so far – we’ll see what unravels in next few days – this has got us back in the game. If before this Budget we were gasping for breath and below the waterline, now the water is at our chin and our head is just above the water. But we are not sitting on top nice and pretty – I would say we are treading water.”

A Labour source said: “This was the first Budget of a Labour government in 14 years that will fix the NHS, rebuild Britain and protect working people’s payslips. It will mean fewer patients waiting on hospital waiting lists, more teachers in children’s schools, 1.5 million homes being built and all the biggest boost in investment in a generation.

“The OBR has said it will deliver growth over the next 10 years. It’s a better sell on the doorstep than the past 14 years of opposition.”