One former senior minister told me Reeves had “spent a lot of time and energy painting a picture of her grim inheritance in the expectation things would brighten up quickly and she could claim credit”.
“By the time she found that things were different, with tight public finances, mushrooming welfare, and the economy stuck in a low-growth trap, she had used up all her political capital and was unable to win the big arguments on welfare reform,” they said.
“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”.
A close political ally of Starmer, Reeves became shadow chancellor in 2021 as Labour campaigned to return to power, resulting in their landslide victory two years ago.
Many Labour MPs believe mistakes made in No 11 soured the prospects for Starmer’s government soon after he and Reeves moved into Downing Street. Starmer himself has pointed to the decision to take away the winter fuel allowance from millions of pensioners, later partly reversed, as being one of the government’s errors.
A senior Labour figure told me: “She’d underestimated the desire for radical change, and lacked political nous on key decisions like winter fuel.”
Reeves however, would not acknowledge this had been a specific problem, and was eager to highlight the progress she believed the economy has made on her watch. Nor was she in the mood to admit that her relationship with business had worsened after she hiked National Insurance tax for employers.
One City source told me the increasing costs for business had an immediate effect, and led to them laying off staff. “There was so much goodwill, but it was genuinely staggering – it just went in a few weeks,” they said.
Reeves credited her decisions as the first female chancellor with creating a “rock of stability and trust”, but acknowledged there had been tough moments in office.
She said the worst had been when she was seen in tears in the House of Commons during a session of Prime Minister’s Questions in July last year. Reeves said: “Don’t cry on national television. That was probably my toughest moment, or perhaps even tougher, seeing the photos of me crying on national television on the front page of pretty much every newspaper the following day.”
Asked if she was disappointed that Burnham has been planning his time as PM for a year, as a Labour MP admitted this week, she said: “I think it is perfectly reasonable for people to have ambition. Andy has never shied away from the fact that he wanted at some point to lead the Labour Party. And I want him to be ready for that, because I want it to be a success and I am sure he will be.”
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