It was a disgruntled backbencher who summed up the mood in Labour ahead of tomorrow’s spending review announcement by Rachel Reeves.
“You don’t become a Labour MP to make cuts,” the MP said, looking at the prospect of at least £5bn needing to be slashed across government departments – including housing, local government and policing – to fulfil the chancellor’s spending plans.
The billions of pounds of necessary savings, estimated by the House of Commons Library, was a calculation made before the chancellor committed herself to another £1.25bn of spending a year by restoring the winter fuel payments to 9 million pensioners.
When the chancellor gets to her feet after Prime Minister’s Questions on Wednesday, she will no doubt be cheered by the Labour MPs behind her.
But the reality is that much of the applause will be performative rather than heartfelt.
The truth is that senior members of the government – and the wider party – are now openly at war with Keir Starmer and Reeves over economic policy.
In their eyes, Reeves will effectively confirm “austerity 2.0” in her spending review, but will not have delivered the boost to growth that she promised.
Labour will be in the worst of all worlds.
Already, the bitterness and bad feeling felt from the negotiations over the available budgets are threatening to deepen long after Reeves has delivered her statement.
In particular, home secretary Yvette Cooper has emerged as a surprising opponent to the Starmer-Reeves project and was said to be on resignation watch after the Treasury enforced a settlement on her department.
But the one to watch out for is deputy prime minister Angela Rayner whose allies are in manoeuvres over potentially triggering a leadership challenge against Starmer at some point.
After weeks of bitter negotiations, Rayner settled reluctantly on Sunday evening after, according to one MP, a threat that she too would have a settlement imposed on her Ministry of Housing, Communities and Local Government (MHCLG).
Both Rayner and Cooper will be spending the months ahead having to defend cuts essentially imposed on them by a chancellor that they themselves opposed.
The problem for Reeves and Starmer is that they are not only failing to deliver significant economic growth but the job market is also tanking – almost as quickly as Labour’s popularity in the polls.
Still, there are a number of Labour MPs looking at the English council and Scottish and Welsh election results in May next year as a marker of whether to look for a change at the top.
One MP noted that “the toxicity in the party has definitely dropped” since the local elections. This was largely put down to the U-turn on winter fuel.
But it appears to have emboldened many now into pushing for a change in direction on the two-child benefit cap and the disability benefit payments.
Others will be looking for a much tougher stance on Israel.
Meanwhile, the spending review will not end the argument on economic policy but, instead, fuel it.
Now that Rayner’s memo to Reeves – calling for eight wealth taxes on the super-rich and big corporations – is out in the open, the calls for imposing them as opposed to making the cuts implicit in the spending review will only grow louder.
As revealed by The Independent, the trade unions now are in full support of such a move and are campaigning for wealth taxes through the TUC.
As Labour’s biggest financial backers, they carry a lot of weight and will strongly influence the debate.
All this adds to the speculation that an oncoming reshuffle could see Reeves’s time at the Treasury come to an end. This could be hurried along if Reeves continues to be awkward about committing to higher future defence spending – something the prime minister is much more committed to.
If Starmer decides that his survival depends on a new chancellor and a change of direction in economic policy then she will be gone. The only serious question will be who replaces her.
