Rachel Reeves might not strike many people as a bold and imaginative chancellor, but when Labour took office last year she embarked on a radical political experiment: completely inverting the normal logic of austerity politics.

Normally, if a politician is going to have to tighten the nation’s belt, they do it at the start of a parliament, to try and create some leeway (or “headroom”, in the now-ubiquitous modern parlance) for some goodies and giveaways closer to the election.

Reeves, on the other hand, presented what she claimed was a whole-parliament spending plan with all the spending front-loaded in the first two-and-a-bit-years, with the promise of some very lean years later on.

It was always wildly implausible, anchored at best on a magical hope that growth would simply happen at some point. It hasn’t. As a result, the Chancellor has already had to break Labour’s explicit commitment not to raise taxes, and after today’s spending review, she is certainly going to have to break her second solemn promise.

For the sake of trying to have a good media cycle, Reeves has refrained from spelling out exactly how she intends to pay for her latest spending splurge. But every informed observer agrees that the only answer is more tax increases.

Perhaps that would be a price worth paying if the spending was going to dramatically kick-start the economy out of its 25-year rut. But although politicians love to call everything “investment”, much of what she announced today is just spending. Sinking more money into the NHS may be good policy itself, if it brings waiting lists down; but it is just adding to the ongoing cost of the state.

Consider her much-touted commitment of an extra £29 billion a year for the NHS. Sounds good, right? But look under the hood in the spending review document itself (Table 5.6) and you’ll note that the increase “Capital DEL” — i.e. the bit that is actually investment, the capital budget — is literally zero.

Reeves is also having to use accounting trickery to massage the scale even of the revenue uplift; the 3% annual increase shown in the spending review disguises that the spending announced today adds up to only 2.7%, the rest coming from a 4% increase in last year’s Budget.

What about the Government’s noisy commitments on law and order, in particular building new prisons? Well, new prisons come out of the Ministry of Justice’s capital budget and the SR reveals (Table 5.9) that the MoJ’s capital budget has been cut by 2.1% over the same period.

Meanwhile the Home Office has fared even worse: its so-called “Resource DEL” (i.e. revenue expenditure budget, day-to-day expenses and costs) has been cut by 2.6%. The press has picked up on the implications for Labour’s promise of more police officers (increases in council tax), but how is the Home Office going to, for example, clear the asylum backlog with fewer resources?

Across all of government, the overall increase in capital expenditure (Table 5.2) is again zero. This might be a spendthrift government, but it is by its own admission not an investing government.

Those on the Right being scathing about a Labour government is no surprise and some may accuse such critics of being desperately partisan. But no two ways about it: this is a government trapped, with no ideas and no way out, between public expectations it made no effort to manage and the grinding reality of Britain’s runaway entitlement spending. And every year, the vice is only going to squeeze tighter.

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Henry Hill is Deputy Editor of ConservativeHome.

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