A budget in three acts.

By Chris Lee – Director and Head of Media Strategy

After Labour’s 2024 budget – the first since Alistair Darling last did the deed under Gordon Brown – Rachel Reeves confidently declared she wouldn’t need to return to ask for more money. Having carved out billions of headroom, largely by asking business to shoulder National Insurance rises on employees, this was meant to be a one-and-done affair. Or that was the line, at least. 

But politics is a capricious art. As we saw on 26 November, the Chancellor was back at the despatch box, once again delivering a significant tax-raising budget. Threading a very fine needle – raising serious revenue, soothing the markets, placating Labour MPs, and avoiding any impression of hostility towards business – Reeves opted for a smorgasbord of measures. Extending the freeze on income tax thresholds, tweaks to tax-free ISAs and to pension salary sacrifice: unflashy, under-the-radar changes designed to replenish the coffers. 

The political set piece, however, was far more complex. A few weeks earlier, on 4 November, at an early morning press conference, the Chancellor rolled the pitch for manifesto-busting rises on working people – income tax, National Insurance and VAT. Yet those tax rises never materialised. Instead, the emotional and political heart of the budget was Labour’s decision to scrap the two-child limit, lifting hundreds of thousands of children out of poverty. 

And that wasn’t even the biggest drama. The leak – the leak of all leaks – leakgate. Just 40 minutes before Reeves was due to speak, the OBR accidentally published its report: the budget, in essence, laid bare. As journalists attempted to dissect the numbers live on air, chaos ensued. It was not the government’s fault, nor the Chancellor’s, and the head of the OBR fell on his sword a few days later. Yet, like any good drama, this was simply the opening act. 

As the OBR’s Richard Hughes exited stage left, Act Two began. It later transpired that the OBR had informed the Chancellor days before the 4 November press conference that the fiscal outlook was not as bleak as once feared. Cue accusations that the government had misled the public about the state of the nation’s finances – and Reeves repeatedly batted away questions about whether the pitch had been rolled on false pretences. 

Then came Act Three. At a press conference the following Monday, the Prime Minister stepped into the spotlight. No misleading here, he insisted. Instead, he looked ahead: slashing red tape to unblock growth, tackling the spiralling welfare bill by confronting the crisis of NEETs – young people out of education, employment or training – and a laser focus on trade. With a muscular moment of candour (no doubt aimed at Reform UK), he acknowledged Brexit had hurt the UK economy and promised to smooth friction with the EU to boost productivity. 

As the government heads towards the end of the year, it could be worse. The budget landed well where it needed to: with the markets and with Labour MPs. In doing so, it not only shored up the national finances but, for now, solidified Starmer’s position. 

But looming on the horizon is a brutal first half of 2026. Massive elections across Wales, Birmingham, London and other numerous Labour strongholds – albeit with a convenient postponement of some mayoral contests Reform appeared poised to win – will test Labour’s mettle. In an increasingly politainment-fuelled world, these mid-term theatrics could play as farce or triumph. Either way, it will not be a smooth run for a government already contending with rumblings of leadership intrigue.