A strong performance from Reeves, but it's a big gamble

Rachel Reeves played a very difficult hand as well as anyone could, in the circumstances.

- ANDREW GRICE

The title of her first Budget – “Fixing the foundations to deliver change” – was a bit clunky, and even raised the eyebrows of some Labour advisers when they first saw it. “Fixing the foundations to rebuild Britain” would have been better, but someone had clearly insisted on the “change” Labour promised at the election.

To be fair, in a strong performance, the chancellor did offer that change, saving her two goodies until last: billions more for education and the NHS, a throwback to the “schools and hospitals” mantra of the Blair-Brown era.

Reeves staged a partial escape from her self-imposed straitjacket by changing the fiscal rules she had described as “nonnegotiable”. She trumpeted an extra £100bn of building projects over five years under her tweaked “investment rule” on debt. The price, to reassure the financial markets, was a tight settlement on day-to-day spending.

The budgets of government departments will rise by 1.5 per cent in real terms in future years after an initial boost – not much above the 1 per cent pencilled in by the Conservatives, which Labour described as extreme austerity. No wonder ministers not responsible for “protected departments” kicked up a fuss. They will be squeezed.

The second rule meant a dramatic £40bn of tax rises, at the upper end of expectations, to ensure day-to-day spending is not funded by borrowing, with £25bn coming from a rise in employers’ national insurance.