Blighty newsletter: Labour’s twin pivots

GDPTomorrow Rachel Reeves, Britain’s chancellor, will deliver her . It is the most important moment for the government since the general election of July 4th, and one that will define its choices for the rest of this parliament.You will find our coverage online tomorrow night and in our weekly edition on Thursday. For now, it’s worth taking a step back to look at the two pivots that Ms Reeves and her boss, Sir Keir Starmer, have undertaken over the summer.The first concerns Ms Reeves’s two fiscal rules, which mandate that day-to-day government spending must be met from tax receipts, and that debt must be falling as a share of by the fifth year of the forecast. These rules, Ms Reeves said dozens (or was it hundreds?) of times before the election, were “non-negotiable”. Up to a point. The government has now confirmed that the definition of debt is to be reviewed, with a gauge known as “public sector net financial liabilities” reckoned to be her preferred measure. That would allow the government to borrow up to around £50bn more. Ms Reeves says changing the way debt is measured will “make space for increased investment in the fabric of our economy”. A ten-year infrastructure strategy is planned for the spring.The second pivot concerns taxation. In an interview , Sir Keir dismissed the idea that Britons would need to accept European-style taxes for European-style services. “I resist the idea that the first place you go is tax,” he said. “The first place the next Labour government will go is to grow.” That formulation persisted throughout the election campaign, even though the funding shortfall confronting Whitehall departments was visible from space.Now it has been ditched. In a speech yesterday, Sir Keir characterised an avoidance of Britain’s fiscal dilemma as part of “the populist chorus of easy answers”. It was time to suck up some hard truths, he said. “Nobody wants higher taxes, just like nobody wants public-spending cuts. But we have to be realistic about where we are as a country.”The careful pitch-rolling ought to mean that market reaction to greater public borrowing is relatively sanguine. But make no mistake: these are huge pivots. Labour campaigned in the language of fiscal discipline; they will govern in the language of investment, renewal, towering cranes and glinting shovels. As for the politics, the long-term prize for Sir Keir, it seems, is to frame the next election as a referendum on higher public spending. “If they think the state has grown too big, let them tell working people which public services they would cut,” he said of his opponents, in what sounded rather like a reprisal of the playbook of his New Labour predecessors. Whether faster growth materialises or not, Labour is betting that when people vote for them, they expect services to improve and taxes to go up—whatever denials may have been aired on the campaign.The price of these pivots is one of credibility. “The time is long overdue for politicians in this country to level with you, honestly, about the trade-offs this country faces,” Sir Keir said. Given the heroic efforts he made during the campaign , that is a little audacious.