Rachel Reeves today took to the dispatch box of the House of Commons to tell the nation that Liz Truss’s energy support package was a scandal: “unfunded” and “untargeted”; a subsidy that sprayed money at the comfortable as well as the struggling.The new line from Labour is that grown-ups do not do such things. Under Rachel Reeves, the Treasury is serious now. The age of the frivolous blanket subsidy of her predecessors is over.Today we learned that Reeves believed the universal Energy Price Guarantee was more than a scandal of spending. She said that with this package of household support, “the previous government pushed up borrowing, interest rates, inflation, and mortgage costs”.
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Yes, that’s the interest rate spike, gilt yields spike, and associated Liability Driven Investments crisis that has become colloquially known as the Truss crash.And she’s right.At the time it was projected that the Energy Price Guarantee could cost up to £200bn. This was by far the greatest element of Truss’s fiscal loosening, with energy spending projections eclipsing the measly £45bn in tax cuts that Labour politicians have hitherto blamed for the economic woes of the country in October 2022.Indeed, around £40bn of that £45bn was pre-announced during the leadership contest and therefore was baked into a Truss premiership. Her two biggest campaign promises were of course cancelling the incoming corporation tax rise (£18.7bn) and undoing the recent national insurance tax rise (£18.1bn). The more unexpected tax cuts such as abolition of the 45p rate, VAT-free shopping, business investment allowances, and IR35 reforms totalled £8.2bn.So, we’re all in agreement. Splurging billions on heating the swimming pools of millionaires turned out to be terrible policy. And it led to a crisis.There’s just one problem for Rachel Reeves. It was her policy. LATEST DEVELOPMENTSMoroccan asylum seeker who killed pensioner charged with attempted murder and assault behind barsIpswich Town release statement after Nigel Farage pictured at Portman Road with shirtRachel Reeves hints energy bill relief may come amid spiralling costs — but millions will miss outLong through the summer of 2022, the Labour Party demanded a universal energy price guarantee, one of precisely the same design as ended up implemented by Liz Truss — with all the disastrous consequences that followed.Reeves herself demanded on 26th August 2022 that the Tories “freeze gas and electricity bills so that nobody pays a penny more during the autumn and winter”, saying that with her as Chancellor, “no one would pay a penny more for their gas and electricity this autumn and winter”. On 15th August 2022 she announced it as “a big offer, a massive commitment that Labour is making today… to freeze bills for all households for six months”.Does this count as Labour’s 20th U-turn? Undeniably.
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