Chancellor Rachel Reeves has asserted that Andy Burnham needs to present a thoroughly worked-out plan to effectively govern from the start. Her comments come as she defends her own economic record, suggesting she will hand over a stable economy to the incoming Prime Minister.
Sources close to Reeves indicate that she dedicated significant effort to outlining the challenging economic inheritance she faced, anticipating a swift improvement that would allow her to claim credit. However, these sources suggest that by the time she recognized the persistence of tight public finances, rising welfare costs, and a low-growth economy, her political capital had been depleted, hindering her ability to champion significant welfare reforms. "It's all actually sad because I think her instincts are generally OK, but by the time she figured out the right things to do, it was too late," one former senior minister commented.
Reeves, who became shadow chancellor in 2021, was part of the Labour team that secured a significant victory two years prior. Some Labour MPs believe that decisions made by the Treasury under her leadership negatively impacted the prospects of the incoming government. Prime Minister Sir Keir Starmer has publicly identified the decision to reduce the winter fuel allowance for millions of pensioners, a move that was later partially reversed, as one of the government's missteps.
A senior Labour figure suggested that Reeves underestimated the public's desire for fundamental change and lacked the necessary political acumen for key decisions, citing the winter fuel allowance as an example. However, Reeves has not acknowledged this as a specific problem and has instead emphasized the economic progress she believes has been made during her tenure. She also did not concede that her relationship with the business community had deteriorated following an increase in National Insurance contributions for employers.
One source from the financial sector stated that the increased costs for businesses had an immediate impact, leading to staff layoffs. "There was so much goodwill, but it was genuinely staggering - it just went in a few weeks," the source said. Reeves, however, told the BBC that she will be handing over a stable economy to the next Prime Minister.