{"id":29621,"date":"2025-05-24T21:21:29","date_gmt":"2025-05-24T21:21:29","guid":{"rendered":"https:\/\/news.godj.com\/news\/there-is-an-alternative-labour-mps-tell-rachel-reeves\/"},"modified":"2025-05-24T21:21:29","modified_gmt":"2025-05-24T21:21:29","slug":"there-is-an-alternative-labour-mps-tell-rachel-reeves","status":"publish","type":"post","link":"https:\/\/news.godj.com\/news\/there-is-an-alternative-labour-mps-tell-rachel-reeves\/","title":{"rendered":"There is an alternative, Labour MPs tell Rachel Reeves"},"content":{"rendered":"


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Iain Watson<\/span><\/p>\n

Political correspondent<\/span><\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

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Rachel Reeves has insisted on the need to “get a grip” on the welfare bill<\/figcaption><\/p>\n<\/figure>\n
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Tina – an acronym, not a person – was very popular with the late Lady Thatcher<\/a>.<\/p>\n

It was in 1980 that the then prime minister – introducing what were radical economic policies – first insisted “There Is No Alternative”.<\/p>\n

Although politically on the left, Chancellor Rachel Reeves has used similar rhetoric.<\/p>\n

She has claimed there is no alternative to last year’s tax-raising budget, blaming the previous Conservative government for a “black hole” in the public finances.<\/p>\n<\/div>\n

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And she has defended making the “difficult decision” to cut welfare payments and restrict eligibility.<\/p>\n

But an increasing number of Reeves’s fellow MPs across Labour’s political spectrum – from social democrat to hard left – are now begging to differ.<\/p>\n

The leaking of a memo from Angela Rayner’s department to the Telegraph<\/a> this week highlighted disagreements at the heart of government.<\/p>\n

The deputy PM was suggesting tax rises worth \u00a33bn-\u00a34bn while the chancellor was cutting the welfare budget by \u00a35bn.<\/p>\n<\/div>\n

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When Gordon Brown was chancellor he would often say he was “receiving representations” from critics with alternative ideas.<\/p>\n

Rachel Reeves certainly knows how that feels.<\/p>\n

In a sign that unease in Labour’s ranks is increasing as its polls ratings decrease, the current chancellor now seems to be inundated with suggestions from her own side.<\/p>\n

From my conversations with Labour MPs, some of these are being put as an alternative to welfare cuts.<\/p>\n

But there is also a growing realisation that further tax rises are all but inevitable if deeper cuts to unprotected departments \u2013 those outside of the NHS, defence, and schools – are to be avoided.<\/p>\n

Some of those pushing alternative ideas want their names to remain off the record. Others have been openly campaigning for a different approach.<\/p>\n<\/div>\n

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The leaked memo also called for a higher level of corporation tax on banks<\/figcaption><\/p>\n<\/figure>\n
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Unions such as Unite – along with predominantly left-wing MPs in the Socialist Campaign Group \u2013 have called for a new tax on the wealthiest, which they claim could raise as much as \u00a325bn.<\/p>\n

Another popular demand is for the chancellor to relax her own fiscal rules on borrowing and debt to free up more funds for investment – which in turn, it is hoped, would push up growth.<\/p>\n

The Treasury has been resistant to a wealth tax, fearful it could scare off investors, and to further changing the fiscal rules (they have already been tweaked once) as they claim this could \u2013 to be blunt – freak the markets, and push up interest rates.<\/p>\n

Reeves’s self-imposed rules require day-to-day government costs to be paid for by tax income, rather than borrowing; and to get debt falling as a share of national income over a five year period.<\/p>\n

But some of Reeves’s colleagues argue she can be more bold within her fiscal rules.<\/p>\n<\/div>\n

Squeezing pips<\/h2>\n<\/p>\n
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The Poole MP Neil Duncan-Jordan \u2013 who organised a letter signed by 42 Labour MPs opposing the proposed welfare cuts \u2013 has called for the restoration of the 50p top tax rate; and increasing capital gains tax rates to align with income tax.<\/p>\n

He claims this could bring in \u00a312bn a year. That policy change is also backed, off the record, by some MPs not regarded as on the Left.<\/p>\n

Jo White is from a different wing of the party \u2013 the leader of the Red Wall group of MPs, who largely see Reform UK as their main opponents.<\/p>\n

She is the MP for Bassetlaw in Nottinghamshire, and has called for the shredding of the “Green Book” \u2013 the Treasury bible which is used to assess the costs and benefits of new projects.<\/p>\n

She believes the current orthodoxy holds back investment \u2013 and therefore growth – in parts of the country which feel overlooked.<\/p>\n

Off the record, a former Labour cabinet minister strongly agrees.<\/p>\n<\/div>\n

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The Crawley MP Peter Lamb is one of the around 100 or so Labour MPs expressing concern about the forthcoming restrictions on eligibility to Personal Independence Payments.<\/p>\n

He believes the remit of the Office for Budgetary Responsibility \u2013 set up by George Osborne as chancellor – needs to be revised.<\/p>\n

For example, the OBR doesn’t take in to account potential savings from the \u00a31bn that is being invested in getting people back to work.<\/p>\n

So by not assessing the likely, financially positive, effect of measures that take people off benefits there is more pressure on the chancellor to make cuts to balance the books \u2013 or to meet her own rules on getting debt down.<\/p>\n

Some of his colleagues are more critical of the OBR \u2013 one asked why Labour was tying its own hands by adhering to a body set up by an austerity Tory chancellor.<\/p>\n

Another pondered why the government was making cuts now to meet debt forecasts which are five years hence and are unlikely to be accurate.<\/p>\n

Demands for reform have also been made from inside the Department of Work and Pensions.<\/p>\n<\/div>\n

Past inspiration<\/h2>\n<\/p>\n
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Lamb is also one of a number of MPs calling for a new type of windfall tax on companies which made excessive profits from Covid contracts, and for more to be invested in mental health treatment which, in turn, would cut the demand for welfare payments from those struggling with untreated conditions.<\/p>\n

Former cabinet minister Louise Haigh has called for Labour to reconsider its manifesto pledges not to increase income tax or employee national insurance.<\/p>\n

Some MPs are still wary of making their demands public. One who has had experience of government told me they were looking for a wider economic reset.<\/p>\n

And some of the new intake, not on the Left, are looking to the past for inspiration.<\/p>\n

They are saying that ideas being put forward by Gordon Brown \u2013 now making representations of his own \u2013 should be taken seriously.<\/p>\n

Brown has suggested raising around \u00a33bn by doubling taxes on online casinos and bookies.<\/p>\n

But some of these MPs also believe the current frontbench should be arguing that reducing poverty is good for the economy \u2013 and that cutting PIPs will take money out of local economies.<\/p>\n<\/div>\n

Back to the future<\/h2>\n<\/p>\n
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There have been calls for – perhaps unsurprisingly – greater taxation on multi-nationals and on tech giants. A number of MPs also favour a land tax. Raising revenue from an immovable asset would be difficult to avoid.<\/p>\n

One ambitious backbencher has backed a land tax and argued for \u00a320bn of revenue-raising, including a revaluation of council tax in England, and higher levies on the savings and investments of high earners.<\/p>\n

Admittedly, that was in 2018. <\/p>\n

And that backbencher’s name? Rachel Reeves.<\/p>\n<\/div>\n

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