Labour Rift Deepens as Rachel Reeves Faces Spending Review Showdown

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Labour Rift Deepens as Rachel Reeves Faces Spending Review Showdown

 

Chancellor Rachel Reeves is at the centre of an escalating internal battle within the Labour cabinet as tensions mount over her upcoming spending review. The conflict, described by insiders as a “proxy war”, is pitting senior ministers against each other and against Reeves, as concerns grow that key manifesto promises could be abandoned in the face of looming budget constraints.

 

Reeves, tasked with defining the government’s fiscal direction, is under mounting pressure to explore alternative revenue sources—chief among them, wealth taxes—rather than resorting to spending cuts. The Treasury’s tight financial limits are leaving little room for manoeuvre, and this pressure is compounded by likely reversals on major cost-saving plans such as scrapping winter fuel payments for millions of pensioners and lifting the controversial two-child benefit cap. Combined, these changes could add up to £5 billion in additional spending, significantly narrowing Reeves' fiscal options.

 

Major departments, including Yvette Cooper’s Home Office and Angela Rayner’s Ministry of Housing, Communities and Local Government, remain locked in budgetary disputes just days before the chancellor is due to present her plans on Wednesday, June 11. Although Education Secretary Bridget Phillipson is reported to have reached an agreement with the Treasury, most departments have not, despite an informal deadline having passed the previous weekend.

 

Adding to Reeves’ challenges is the government’s pledge to raise defence spending to 3 per cent of GDP—a goal that has become more complicated following NATO’s call for members, including the UK, to increase their commitments further to 3.5 per cent.

 

The internal discord has sparked fears that Labour's broader political strategy is faltering. “The chancellor's decisions over the next week will ‘see the ending of a number of manifesto pledges as actually being deliverable,’” a senior Labour source told The Independent. Reeves’ efforts to maintain fiscal discipline are already being likened by critics to “austerity 2.0”, stoking frustration among Labour MPs and trade unions who want her to consider taxing the wealthy instead of slashing budgets.

 

 

Calls for alternative fiscal measures have been growing louder, with a leaked memo from Deputy Prime Minister Angela Rayner proposing eight wealth tax options. These include raising dividend tax rates for high earners and clamping down on property speculators who exploit corporate structures to avoid stamp duty.

 

In the words of one senior Labour insider: “I think the spending review is becoming a proxy war to desperately try and stop Labour facing an existential crisis – the breathtaking collapse in support continues, and [the plan for the party is to] just try and deliver some of its manifesto so that ordinary voters can see and feel that they have.”

 

They concluded with a stark prediction: “I cannot see how Rachel Reeves lasts.”

 

  Adapted by ASEAN Now from The Independent  2025-06-05

 

 

[The Cyclist]

So popular is Rachel from Customer Care, that she has just cancelled a £5000 a ticket fundraiser

 

Due to low demand

 

https://www.thetimes.com/uk/politics/article/labour-axes-5000-a-ticket-reeves-fundraiser-after-low-demand-52mjw9mzh

 

Labour. A busted flush already.

[JonnyF]

Labour have crashed and burned far quicker than most predicted.

 

What a disaster. 

 

The only question remaining is how much damage they will do before they are removed from office at the next election. With Rachel from accounts, her budget for recession and her fake CV, my guess would be - quite a lot.

 

[JonnyF]

7 hours ago, The Cyclist said:

So popular is Rachel from Customer Care, that she has just cancelled a £5000 a ticket fundraiser

 

Due to low demand

 

Maybe that date clashed with the free tickets she got for the Taylor Swift concert?

[The Cyclist]

Oops, I did it again, someone once sang

 

Quote

Plans to invest £160bn of surplus funds from final salary pension schemes to boost the UK economy over the next 10 years have been dealt a blow by a Whitehall assessment that found there was likely to be little more than £11bn available to spend.

 

https://www.theguardian.com/business/2025/jun/07/pensions-report-cuts-rachel-reeves-planned-growth-funds-from-160bn-to-11bn

 

Reeves / Labour, just found another £149 Billion black hole.

[JonnyF]

On 6/8/2025 at 8:55 AM, The Cyclist said:

Reeves / Labour, just found another £149 Billion black hole.

 

It would be mildy amusing, until I start to wonder which group they will raid to try to make up the shortfall?

 

I mean they've already removed the pensioners fuel allowance, done a land grab on the farmers, removed much needed benefits from disabled/special needs people, added VAT to children's school fees. 

 

Surely they're running out of vulnerable groups to go after?