‘Fiscal rules’ has become a stock phrase

Good morning. The Labour government’s choices on tax and spend will come under renewed scrutiny next week when Rachel Reeves unveils further spending curbs to stick within her fiscal rules. Below are some thoughts on an odd quirk of that debate within the party.

Changing tack

When Labour was in opposition, the party leadership had a habit of using “fiscal rules” as an all-purpose, “the dog ate my homework” phrase to avoid having ugly rows.

It’s much more difficult and stressful to say things such as “compensate women who lost out due to the increase in the state pension age? Are you nuts? Give a huge amount of money to a cohort that mostly doesn’t need it and doesn’t vote for us?” rather than “unfortunately, due to our fiscal rules, we simply can’t do this”.

Now in government, that phrase is enjoying a strange afterlife. It is the thing Labour MPs who worry about the government’s policy agenda and its long-term political prospects should flex. There is an awful lot of “well, if Germany can flex its rules, why can’t we?” This is a question with a pretty good answer: Germany is borrowing at 2.8 per cent, while the UK is borrowing at 4.7 per cent.

If the UK wants to flex something, it will have to be its commitments on spending (which Labour MPs dislike, as they think, in my view rightly, it is the path to social misery and political disaster) or on tax (which Labour MPs are reluctant to call for, other than nebulous calls for more taxes on “the rich”).

A lot of Labour MPs are unhappy and worried. But you should only expect a change of approach from the government if the party’s internal rows about “fiscal rules” turn to ones about increasing income tax or reversing Jeremy Hunt’s cuts to national insurance.

Now try this

Restaurants I will miss being in walking distance of when I leave Stoke Newington in a little over a week (!), an intermittent series: the wonderful vegetarian restaurant Rasa.

Top stories today

• ‘Top priority’ | Poland and the UK discussed ways to work together to drive up defence production while obtaining better value for taxpayers at a meeting in London on Wednesday.

• No tax and no spend | Rachel Reeves will not raise taxes in next week’s Spring Statement and will instead turn to public spending reductions, Labour officials said, to ensure she sticks within her fiscal rules.

• ‘Doom loop’ | The financial outlook for the UK’s higher education sector has worsened, increasing the risk of a large provider becoming bankrupt, according to the university regulator, the Office for Students.