The Scotsman Bulletin Tuesday July 30 2024 #RachelReeves

The Scotsman

Scotsman head of news Dale Miller catches up with our Westminster correspondent Alexander Brown to discuss the £22 billion black hole in public finances

Transcript

00:00Hello and welcome to the Scotsman's daily video bulletin for this Tuesday. My name is

00:12Dale Miller. I'm head of news at the Scotsman and I'm joined by our Westminster correspondent

00:17Alexander Brown. Alex, a couple of weeks into this new Labor government and things are starting

00:23to get interesting. I want to get your views on that shortly. The front page today, Scotsman

00:29we led on Rachel Reeves. It was a stern address. I don't know whether there's a better way to

00:36describe that in terms of her delivery yesterday, in which she talked about the $22 billion hole

00:44in the finances. Now, the Office for Budget Responsibility went as far to say that last

00:51week they found out that the extent of the financial gap was greater than they expected

00:56as well, which seemed to back up Rachel Reeves' position. But the big thing here was the,

01:01and the new update was a cut or an introduction in the means testing of the winter fuel payment.

01:07And it leaves the Scottish government with a particularly interesting decision to make,

01:12Alex, because we're reporting this morning that it could take a hundred million pounds

01:16for them to continue offering this payment when it becomes devolved this winter. It's

01:22a sticky one. Do you think Labor got the messaging right about this black hole?

01:27I think it's very difficult to square the landing on promising no tax rises and no austerity,

01:36and then in the first few weeks announcing that there will be huge cost public services when

01:42promising change. But I think to look at whether Labor handled this well, I think we have to look

01:46at how Rachel Reeves conducts herself in the chamber, and also what the response has been

01:51from academics and think tanks. So in the chamber, Rachel Reeves was very angry. I think it was the

01:56angriest I've seen her since she became chancellor, or even shadow chancellor, and was going through

02:02line by line for some quite astonishing figures. I think the overspend on asylum and immigration

02:07alone was a 6.5 billion black hole. I think the total figure for it was 22 billion. Examples

02:15given were one of the advanced learning things, a flagship policy for Rishi Sunak that was going to

02:20transform education, would have cost billions of pounds, and the Tories had set aside no money for

02:25it. So it's really damning for the Tory government, and I think it's important to make sure that

02:29everyone looks bad about this. But a lot of the black hole we did know was there. So it is,

02:37in the words of the Institute of Fiscal Studies, not entirely honest for Labor to say they had no

02:43idea about the scale of the problem. And what's difficult for them going forward is the SNP will

02:49try to frame this as a choice. I think the Lib Dems are going to try and frame this as a choice

02:53to deliver these cuts. And now, having promised there won't be any tax rises, we are expecting

02:58there to be some form of tax rise in October. And I think it was notable the chancellor kept saying

03:04there would be no tax rises for working people, which, if we're reading between the lines, means

03:10a wealth tax or a tax on businesses. And then that, you know, makes it difficult because the

03:15Labor Party have to answer, what constitutes a working person? If you're running a lot,

03:19are you not a working person? So it's very difficult. And it also creates an argument

03:24and a rift again with the Scottish government, who now have to, you know, find money to shore up this

03:29shortfall, which is going to be hard when there's not any money, there is no money to be had.

03:36Alex, Rachel Reeves kept repeating it was almost this one set line that she'd read out about

03:43the blame was squarely on the Tory government. Jeremy Hunt refuted that quite strongly in the

03:48chamber as well. It was an interesting dynamic. I want to ask you what this means for there's

03:54all this talk about the reset in relationships between this new UK government and the Scottish

03:59government. This seems to be the first blip on the radar. The Scottish government saying they

04:04only found out 90 minutes before it was read out in the chamber. The Labor government have said,

04:09no, we did tell them the Scottish government earlier. But it doesn't seem a great start to

04:16the relationship a couple of weeks. Is that fair to say? It's not a great start. But I also I think

04:22it's really not the biggest thing in the world. The convention is things have to be announced in

04:25the Commons. And we have to take some of the announcements from both the UK government and

04:31Scottish government with a pinch of salt. Just because Scottish governments say they weren't

04:34informed, doesn't necessarily mean they weren't informed. And the same for the UK government

04:39saying they did. Both sides try and, you know, play politics with these issues, which is

04:44unfortunate. And I think it speaks to the wider problem with this. We have a Tory government that

04:49kind of hit the figures, it cooks the books. And a Labour Party that has refused to be honest

04:54about the financial situation, knowing they knew what they would be coming into.

04:59And one of the bigger problems when we speak about Scottish government is the Labour kind of knew

05:04and have defended the Winterfield Allowance. I think Darren Jones, Chief Secretary of Treasury,

05:08wrote a letter last year to the then-Chancellor, Jeremy Hunt, saying it was imperative it was

05:14protected. Why was he abandoning pensioners? Why was he abandoning the most vulnerable?

05:19And now that's being thrown back in their faces, and that will be thrown at them by the SNP. It's

05:24already being referenced by the Conservatives. And a huge row has emerged over the civil service,

05:29whether they hide things from the Tories, obviously they didn't, but it helps the

05:34Conservatives to kind of have a, we weren't informed about this, we didn't know, I would

05:38like to call into question the integrity of the civil service rather than be accountable for our

05:43own actions. And it smears everyone. No one is having a particularly honest conversation about

05:49the finances when hard decisions and hard conversations need to be had. So it's the

05:54beginning of a rift. It's not a huge problem, but it speaks to a vulnerability on the part of the

06:01Labor Party that could only get worse come October. You can read all the latest about the

06:08100 mil gap or bill that the Scottish Government faces at the back of this decision at Scotsman.com

06:15and all Alex's coverage of the ongoing fallout from what the Chancellor has announced at

06:22Scotsman.com. Just go to the politics tab on the navigation bar and please follow us on Facebook

06:28X and Instagram and go out and buy a copy of the paper tomorrow. Thanks for joining us.

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