Assessing Rachel Reeves as a chancellor

With a new Chancellor likely under a burnham government, how do we reflect on Rachel Reeves’ term as Chancellor?

Firstly, what was her best decision?

If I had to pick one, I would probably say making planning reform the centrepiece of economic policy rather than treating it as a niche housing issue.

Reeves recognised that Britain’s weak productivity is not just about tax rates or public spending. It’s also about an economy that finds it extraordinarily difficult to build houses, factories, electricity networks and infrastructure. By backing reforms to speed up planning decisions and major infrastructure, she started to tackle one of the UK’s most persistent supply-side constraints. 

There are other contenders:

• Restoring fiscal credibility. However controversial some of the spending cuts and tax rises were, sticking to fiscal rules arguably helped reassure financial markets after the turbulence of the Truss era and coincided with lower interest rates than might otherwise have prevailed. 
• The National Wealth Fund. This was an attempt to use public capital to crowd in private investment into strategic sectors, particularly clean energy and advanced manufacturing. Whether it ultimately succeeds depends on execution.
• Pension reforms. Efforts to encourage UK pension funds to invest more in productive domestic assets could prove significant over the longer term if they genuinely increase investment in infrastructure and innovative firms. 

That said, there is a difference between good policy and good politics.

Planning reform is economically coherent and enjoys support from many economists across the political spectrum. But politically it has been overshadowed by more contentious decisions, such as changes to employer National Insurance, welfare reforms and winter fuel payments. Those measures have often dominated public perceptions of Reeves’ time as Chancellor.

So my assessment would be:

1. Planning and infrastructure reform (best long-term structural policy).

2. Restoring fiscal credibility after a period of market instability. 

3. Pension and investment reforms aimed at boosting long-run growth.

Whether history judges Reeves favourably will probably depend less on the immediate fiscal decisions and more on whether Britain actually builds lots more homes, infrastructure and productive investment over the next decade. If those reforms deliver, they could end up being the most consequential part of her legacy.

What was Reeves’ worst decision?

There is no consensus answer, but one criticism has been remarkably consistent across economists and commentators from different political perspectives.

The most frequently cited mistake was the pre-election decision to rule out increases in income tax, employee National Insurance and VAT while simultaneously inheriting public finances that many independent analysts had already warned were unlikely to add up. The Institute for Fiscal Studies, Resolution Foundation, IMF and others had all argued before the election that there was a big gap between spending ambitions and available revenues. 

Critics argue this had several knock-on effects:

• It boxed the Treasury into a corner. With the three largest revenue-raising taxes politically off limits, Reeves had fewer options when the fiscal outlook deteriorated, forcing reliance on less efficient or more politically contentious measures. 
• The employer National Insurance increase. Rather than raising employee NI, income tax or VAT, the government increased employer National Insurance contributions. While this honoured the letter of the manifesto, many businesses argued it discouraged hiring, particularly in labour-intensive sectors. 
• Pressure for spending cuts. With tax options constrained, greater emphasis fell on welfare savings and measures such as restricting Winter Fuel Payments. Those decisions proved politically damaging and several were later modified or reversed, weakening the government’s fiscal plans and political authority, and undermining Kier Starmer’s position as. Prime Minister.. 

A broader criticism is that Reeves appeared to accept the pre-election fiscal framework rather than openly arguing that taxes would have to rise. Some analysts contend that an early reversal of the previous government’s National Insurance cuts, combined with a candid explanation of the public finances, might have been economically cleaner and politically more sustainable than a series of indirect tax rises and spending cuts. 

Other decisions that have attracted significant criticism include:

• the handling of the Winter Fuel Payment changes, which generated considerable political opposition before being softened;
• leaving insufficient fiscal headroom against her own fiscal rules, making later shocks much more difficult to absorb;
• relying heavily on employer National Insurance as the principal revenue raiser, despite concerns over its impact on business investment and employment. 

How will history judge Reeves?

History tends to judge Chancellors on three things: Did the economy grow? Did living standards improve? Did they leave the public finances in better shape?

If 1 is a “complete disaster” (e.g. the shortest, most chaotic Chancellorships) and 10 is “one of the all-time greats” (think Gladstone, Lloyd George, Nigel Lawson or Gordon Brown in terms of historical impact, whether admired or not), I’d currently put Rachel Reeves at around 4.5–5 out of 10.

At the moment, Reeves has yet to score decisively on any of those measures. Equally, she hasn’t presided over a financial crisis or made a catastrophic error on the scale of the 1972 Barber Boom or the 2022 mini-budget.

My guess is that historians will see her as a competent but ultimately constrained Chancellor; someone who understood many of Britain’s structural economic problems but whose political choices, especially before the election, severely limited her ability to tackle them.

If growth picks up over the remainder of this Parliament and planning reforms translate into significantly higher investment and housebuilding, she could climb to 6 or even 7.

If growth remains weak and the fiscal position continues to require repeated tax rises or spending cuts, she is more likely to be remembered as a 4.

So, based on the evidence available today, 5/10 seems a fair assessment: neither a failure nor a transformative Chancellor, but one whose long-term reputation will depend heavily on whether the structural reforms she championed actually deliver results.

Overall, the central criticism is less about any single Budget measure than about the strategic choice made before the election. By committing not to raise the main taxes, Reeves limited her room for manoeuvre once in office, with consequences that shaped much of her subsequent fiscal policy. On this reading, Reeves brought greater fiscal discipline and a welcome focus on long-term supply-side reform, but her self-imposed political constraints and a series of unpopular fiscal choices meant she never translated economic credibility into sustained growth or public confidence.

Professor David Bailey works at the Birmingham Business School.