Rachel Reeves’ Spending Review was certainly an eye opener for those watching closely. The Government’s approval is falling, fast. Recent YouGov polls show only around 19% approve of Labour’s performance, with a net approval of roughly –40% to –47%. Reform have been the obvious winners in a political environment that has seen both the two major political parties’ approval fall. Us politicos know that often the best place for political predictions is often the betting market. Oddschecker current has Nigel Farage as the firm favourite to be the UK’s next Prime Minister, but please don’t all rush to place bets on my say so.
Clearly, the Government has realised that it needed to act, and quickly. The Spending Review on Wednesday was certainly a sizeable injection of cash into the UK economy. With the biggest nuclear building programme for half a century has been announced with £14.2bn being poured into the Sizewell C nuclear power station, £15bn for new rail, tram and bus networks across the West Midlands and the North, £11 billion in defence spending, £7bn for new prison places, an extra £29bn a year for the NHS just some of the key announcements. If the Conservatives have accused Rachel Reeves of holding the ‘magic money tree’, then the Chancellor has seriously given it a good shake. It’s also important to remember that this was all done without an OBR forecast, something Liz Truss’ famous ‘Mini Budget’ was criticised for.
For the real estate and development sectors, there was certainly some news to keep us interested. The Chancelor announced a large injection into social housing, in the form of £39 billion being committed over 10 years to an Affordable Homes Programme. This is the largest investment in social and affordable housing in 50 years, nearly quadrupling the previous £11.5 billion five‑year allocation, an important policy for many Labour supporters.
The Government is not disregarding development from private investors and developers here. We must acknowledge that the Government has made significant changes to the NPPF, and has set a positive tone for development. What we are seeing here is, a shifting of government focus onto social housing. A recent YouGov poll commissioned by the National Housing Federation found that 53% of Britons want the Government to prioritise building social housing—over 21% who favoured homes for sale and just 7% preferring private-rent developments. That makes people about three times more likely to support social homes over private ones. It is also notable that, in a political environment where Reform is the greatest threat to Labour, the Labour Government is particularly keen to shore up its flanks on issues that resonate in traditionally Labour areas of the so-called ‘Red Wall’ – former industrial areas in the Midlands and North where Reform’s policies of nationalisation, abolishing the two-child benefit cap and the importance of social housing have been attracting support.
But what are the other parties saying, I hear you say?
Shadow Chancellor Mel Stride was quick to label Rachel Reeves’s Spending Review as a “fantasy,” accusing the government of adopting a reckless “spend today, tax tomorrow” approach. Stride has made his pitch about returning to ‘sound economics’, hoping to return the reputation of the Conservatives as a fiscally responsible political party, criticising Liz Truss’ ‘Mini Budget’ at the Royal Society for Arts, Manufactures and Commerce event attended by your truly. That said, the Shadow Chancellor has certainly had his Weetabix, claiming the Spending review was “not worth the paper it is written on,” and would lead to “cruel summer of speculation” about how the Government would make up the financial shortfall.
Reform have been particularly bullish in their response to the Spending Review, with Richard Tice issuing a sharp critique of yesterday’s Spending Review, labelling it “completely out of control”. That said, Reform hasn’t publicly commented specifically on the social housing announcement within the Spending Review.
Whilst Ed Davey hasn’t addressed the social housing announcement directory, local Liberal Democrats on the other hand have, with Liberal Democrat Group Leader for Southwark, Cllr Victor Chamberlain saying “We welcome signs of progress on funding for social and affordable housing – but the proof will be in the pudding. Southwark is at the epicentre of London’s housing crisis. Council housebuilding has already ground to a halt under this Labour Government, while the housing waiting list has ballooned to 19,000. There’s no clarity on whether Southwark will receive a penny of this new money to help those in desperate need.”
Rachel Reeves come into this Spending Review off the back of last summer’s decision to remove Winter Fuel Payments from roughly 10 million pensioners. In a humiliating U-turn, she has had to make a significant backtrack, meaning payments will only apply to those earning under £35,000. However, this means roughly 9 million pensioners will still receive payments. Reeves says that improving public finances has allowed this £1.25 billion worth of support to return without additional borrowing or taxes. That said, critics of the move such as the Institute for Fiscal Studies have said “Despite some of the rather odd recent claims, neither the economic forecasts nor the public finances have improved relative to the genuinely difficult situation we knew about a year ago, rather the reverse.”
The Government needs to quickly develop what its story is for Britain. What is the Government pitching us? Political slogans often get criticised, but you can’t deny their effectiveness. Get Brexit done, Stay home protect the NHS save lives, America first, are all powerful in their own ways and Labour need to come up with their own version fast. What are they ‘selling’ to the general public, what is their vision for a future Britain? Reeves was right on one thing; benefit needs to be felt by the electorate. There is no point talking about GPD rises or growth figures, if the average person does not feel that benefit either in the services they use or in their paycheque.
The Government is clearly feeling the pressure. We are still quite a bit away from the next general election, but opinion polls, local elections, and the occasional by-election have not been kind to the current Government. This cash injection is a move to try and squeeze any possible growth out of a flatlining economy. We’ve said from the moment Labour came to power that the Government is gambling for growth, and the news today is a serious throw of the dice.
©House of Commons – Rachel Reeves
