Why Rachel Reeves can’t seem to make her ‘£22bn black hole’ narrative convincing

R achel Reeves had hardly stepped down from the dispatch box to make her first big statement as chancellor of the exchequer before facing a furious backlash.

She had claimed to have discovered a £22bn hole in public finances upon taking office and was using it to explain why the new Labour government will not be spending big to save failing public services. Later, she told Sky News that her predecessor Jeremy Hunt had “knowingly and deliberately lied” about the UK’s financial position.

Hunt took issue with the veracity of Reeves’s claims and accused her of discrediting politics by calling him a liar.

Hunt also knows that Reeves’ claims are designed to discredit – once and for all – the Conservative Party’s long-established reputation for economic management. This reputation is the most valuable electoral asset for what is arguably the world’s most successful political party. As The Economist describes, recent events aside, the Conservative party has “been in the business of winning elections since the 1830s”.

A tarnished brand can ruin a party’s electoral prospects for a generation or more. Just ask the Liberal Democrats about tuition fees. Ask the Tories about Black Wednesday in 1992, when John Major withdrew the UK from the European Exchange Rate Mechanism.

The 2022 mini-budget may also prove a watershed, with former Conservative prime minister Liz Truss and her chancellor Kwasi Kwarteng widely blamed for crashing the UK economy. The disaster has certainly been cited as a key reason for the Conservative loss in 2024, but it has not yet proved to be a useful tool for Reeves as chancellor.

The potential reward for Labour, if it is able to seize the mantle of economic competence from the Tories, is enormous. But so is the challenge of unravelling one of the most stubborn narratives in UK politics. Labour has always been the tax-and-spend party and the Conservatives the party of fiscal prudence.

This narrative is partly a history written by the victors: a result of the Conservatives having spent so much time in office. But, as former SNP spin doctor Kevin Pringle has argued, it’s also partly explained by Labour being “notoriously bad at communicating a positive or even fair story about its time in office, which leaves the field free for the Tories to sell a malign one”.

‘I’m afraid there is no money’

Nothing demonstrates Labour’s talent for handing away a narrative better than what happened in the wake of Labour’s 2010 election loss.

It was then that Liam Byrne, Labour’s outgoing chief secretary to the Treasury, left a note for his successor in his office that read: “Dear Chief Secretary; I’m afraid there is no money. Kind regards – and good luck! Liam.”

Regardless of Byrne’s motives, the note was a catastrophic error of judgement. It was a political own goal that seemed to make light of an economic depression that had ruined millions of lives and livelihoods. It was also a gift to the Conservatives: a ready-made headline and a priceless “prop” that David Cameron could brandish when campaigning. The note made as many appearances on the 2015 election campaign trail as a cabinet minister.

Byrne was really only participating in a long tradition of adding a personal touch during the peaceful and orderly transfer of power. Since Churchill – and presumably before – political leaders have left advice, high-proof alcoholic gifts, insults, occasional catastrophes, and jokes like Byrne’s for their successors to find.

A key example stems from the 1964 general election – a narrow victory for Harold Wilson’s Labour party – and an apology that is often compared to Byrne’s note in 2010 (not least by Byrne himself). Handing over the office, and the economy, to the incoming chancellor (and future PM), Jim Callaghan, the outgoing chancellor Reginald Maudling said he was sorry “to leave it in this shape”.

But Maudling’s apology to Callaghan was spoken, not written. It could not be used as Byrne’s note was. As Mad Men’s Don Draper once remarked: “you can’t frame a phone call”.

The Conservatives could refer back to Byrne’s note every time they were challenged on economic matters. And this tactic has had absolutely no expiry date. We last heard about it in parliament on April 24 this year, over a decade after the fact, when then deputy prime minister Oliver Dowden mentioned it to continue a narrative entrenched by Cameron and George Osborne in 2010: “that painful cuts to the public sector were necessitated by the outgoing Labour administration’s irresponsible borrowing”.

Labour now seeks to turn this same narrative against the Tories. When Darren Jones spoke of entering his new office as chief secretary to the Treasury recently, he remarked: “there was no note in my drawer at all, so maybe they can’t afford the notepaper to write a note on … who knows?”

Or maybe the Conservatives, having so successfully deployed Byrne’s note, were never going to repeat his mistake.

In his remark, Jones had inadvertently diagnosed Labour’s problem perfectly: “there was no note”.

Labour doesn’t yet have a comparable talisman that can be used to build (or repossess) a narrative. They can’t just invoke the 2022 mini-budget – and the crashing of the UK economy – by waving around Liz Truss’s 40-page growth plan.

And sure enough, instead of believing Reeves when she says the country’s finances are in a worse state than she expected, the nation’s response has been to question why she was surprised by anything, having had access to the figures for some time. This may be perfectly true but if Byrne’s story tells us anything, it’s that a successful story can be built around very little in politics.

These processes do, however, take time. Labour is already planning for 2029, “sowing a political narrative of being left a disastrous financial inheritance by the Conservatives, while positioning themselves as the fixers”. However, in trying to sow this narrative, Labour is, thus far, playing catch-up, and they are still playing by the Conservatives’ rules.

GOING FURTHER

• Ex-Treasury secretary Liam Byrne's note to his successor: there's no money left | The Guardian

Sources:

▪ This piece was originally published in The Conversation and re-published in PUBLIC SQUARE UK on 2 September 2024. | The author writes in a personal capacity.

▪ Cover: Flickr/HM Treasury. (Licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.)