Rachel Reeves’s attempt to save her reputation is futile

She may have been one of the most unpopular chancellors of modern times, widely mocked during her tenure in the Treasury for allegedly embellishing her CV and sobbing in the House of Commons before abruptly being dispatched to the backbenches by the new prime minister, Andy Burnham. But at least, according to the woman herself, it turns out we have Rachel Reeves all wrong. At a lecture at Harvard university yesterday, Reeves robustly defended her record.

Of course, we all understand that she wants to salvage something from her short time in office. But is it perhaps a little too late to rescue her reputation? The idea that tax rises, especially on employment, ‘strengthen an economy’ may seem up there with claims that a double vodka helps you wake up in the morning or a triple cheeseburger lowers your cholesterol. Comforting, perhaps, but probably not true. Not to Reeves, however. ‘I increased national insurance contributions for employers,’ she told her audience: If she’s not careful, Reeves could even be at risk of turning into a Labour version of Liz Truss And alongside that, I raised taxes on wealth and on the wealthiest, to shift the tax system towards rewarding work, enterprise and investment, rather than the passive accumulation of wealth.

Well, perhaps. And yet, it’s not clear that many people would share Reeves’s view on this. Andrew Bailey, the governor of the Bank of England, for example, argued in a speech last year that the tax raid on employers had hit both employment and wages. Likewise, it crippled hiring, according to the Confederation of British Industry in a report at the end of last year. Meanwhile, major employers such as Tesco, Amazon and Next wrote to Reeves two years ago to warn it would be significant ‘job losses’.

The list goes on and on. It is very hard to find any mainstream economic forecaster who actually thinks the tax rise ‘strengthened the economy’. That is not all. Reeves ramped up borrowing, triggering a surge in bond yields that will prove expensive for years. Debt interest was a staggering £100 billion a year when she took office but had risen to £120 billion by the time she left. Investment dried up, and industry started to collapse, killed off by her tax rises and the soaring energy costs she did nothing to contain.

As chancellor, she made a series of embarrassing U-turns that meant the welfare bill ran out of control. And perhaps worst of all, Reeves failed to use the momentum of a huge election win in 2024 to push through any meaningful supply-side reforms, such as on planning, that might have made a difference to growth. It is not a great record. If she’s not careful, Reeves could even be at risk of turning into a Labour version of Liz Truss, another former holder of high office who spends a lot of time trying to defend a record that, on the surface anyway, was not a huge success.

It is a mistake. Rachel Reeves can make her case at Harvard if she wants to – but good luck to any attempt she makes to save her reputation now.