> ## Content Index > Fetch the complete content index at: https://www.europeans.today/llms.txt > Use this file to discover other available public pages before exploring further. # Five ways the budget shows Rachel Reeves is thinking long-term more than the Tories ever did - URL: https://www.europeans.today/2024/11/03/five-ways-the-budget-shows-rachel-reeves-is-thinking-long-term-more-than-the-tories-ever-did/ - Published: 2024-11-03T01:00:00.000Z - Updated: 2024-11-04T01:49:02.000Z - Description: Chancellor Rachel Reeves’ first budget in 14 years shifts focus to long-term economic strategy, with £100 billion in investment, enhanced oversight, regional empowerment, infrastructure projects, and bolstered public services. Challenges remain, however. - Author: Nathan Critch - Tags: Budget 2024, Barnett Formula, Chancellor, Devolution, Labour Party, National Wealth Fund, Office for Value for Money, Rachel Reeves, UK Budget, UK Budget 2024, UK Government, United Kingdom, UK Politics **TL;DR | Highlights from this story** ● Labour’s budget marks a pivot to a long-term strategy with institutional reforms and a new National Wealth Fund. ● Investment-led growth highlighted, including £100 billion public spending on sectors like biotech and aerospace. ● Reeves approved significant infrastructure projects, including the HS2 link, new homes, and R&D protection. ● Regional empowerment focused on devolved funding, but uneven autonomy and funding asymmetries remain concerns. C hancellor Rachel Reeves presented [Labour’s first budget](https://assets.publishing.service.gov.uk/media/672232d010b0d582ee8c4905/Autumn%5FBudget%5F2024%5F%5Fweb%5Faccessible%5F.pdf?ref=europeans.today) in 14 years by promising to put an “[end to short-termism](https://www.lgcplus.com/finance/budget-live-latest-news-and-reaction-from-local-government-30-10-2024/?ref=europeans.today#:%7E:text=On%20economic%20growth%20Ms%20Reeves,target%20for%20all%20government%20departments.)”. British governments typically see budgets as an opportunity to present policies providing short-term gain in terms of public popularity, even if they do little to improve Britain’s long-term economic prospects. Over the past ten years, governments have adopted and then abandoned [11 different economic strategies](https://www.ippr.org/media-office/business-groups-back-new-ippr-blueprint-to-end-flip-flopping-and-to-get-serious-about-green-industrial-growth?ref=europeans.today), and [seven different fiscal rules](https://www.economicsobservatory.com/fiscal-rules-what-value-if-they-change-whenever-politically-convenient?ref=europeans.today). The last Conservative government’s budget contained a range of tax cuts, most notably a 2p cut on National Insurance. Little consideration was given to the medium-term [implications of these cuts](https://www.instituteforgovernment.org.uk/comment/hunts-spring-budget?ref=europeans.today). Labour inherited a funding squeeze, alongside the need to balance the books over a five-year period based on the previous [fiscal rules](https://www.instituteforgovernment.org.uk/comment/hunts-spring-budget?ref=europeans.today). This kind of short-termism is a [familiar feature](https://journals.sagepub.com/doi/full/10.1177/13691481241259385?ref=europeans.today) within British economic policymaking. A winner-takes-all, majoritarian electoral system encourages governments to [prioritise electoral considerations](https://theconversation.com/jeremy-hunts-budget-is-more-about-short-term-politics-than-the-economy-201910?ref=europeans.today) over a longer-term economic strategy. Here’s how Reeves is taking a different approach in her first budget. ### 1\. Long-term strategy Reeves has underscored Labour’s commitment to long-termism through various institutional reforms. The government had already announced the creation of [a new body](https://www.gov.uk/government/news/new-body-to-get-a-grip-on-infrastructure-delays?ref=europeans.today) to drive a new industrial strategy. This will now be accompanied by a new [National Wealth Fund](https://www.gov.uk/government/publications/national-wealth-fund-mobilising-private-investment/national-wealth-fund-mobilising-private-investment-accessible?ref=europeans.today#:%7E:text=More%20capital%3A%20the%20NWF%20will,be%20committed%20over%20this%20Parliament.) to provide private investment into infrastructure. The launch of the [Office for Value for Money](https://www.gov.uk/government/publications/fixing-the-foundations-public-spending-audit-2024-25/fixing-the-foundations-public-spending-audit-2024-25-html?ref=europeans.today#:%7E:text=The%20OVfM%20will%20have%20two,and%20deliver%20value%20for%20money.) will scrutinise spending decisions. And the Office for Budget Responsibility’s role in [assessing the impact](https://assets.publishing.service.gov.uk/media/672232d010b0d582ee8c4905/Autumn%5FBudget%5F2024%5F%5Fweb%5Faccessible%5F.pdf?ref=europeans.today) of capital investments, government policies and departmental spending will be enhanced. ### 2\. Investing for growth Alongside a few surprises such as an uplift to the minimum wage, increased tax on private jets and the continued freeze on fuel duty, the main theme of the budget was investment-led growth for the long-term. To that end, Reeves has [changed the government’s fiscal rules](https://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=newssearch&cd=&cad=rja&uact=8&ved=2ahUKEwiCtMzJtraJAxW9VkEAHdnTJ40QxfQBKAB6BAgJEAE&url=https%3A%2F%2Fwww.cnbc.com%2F2024%2F10%2F24%2Fuk-budget-britain-announces-major-change-to-fiscal-rules-.html&usg=AOvVaw0ID8%5FyR6rQOhWPkkOAJy4z&opi=89978449) around debt to enable more headroom for investment. She also raised national insurance contributions for employers to fund this investment wave. These measures will be used to plough [**£6.1 billion** into “growth sectors”](https://www.theguardian.com/uk-news/2024/oct/30/budget-2024-key-points-at-a-glance?ref=europeans.today) such as engineering, biotechnology and medical science. The chancellor committed **£1 billion** into the aerospace industry, **£2 billion** into electric vehicle development, and **£500 million** into life sciences. In total, the public investment will amount to [**£100 billion** over the next five years](https://www.gov.uk/government/news/chancellor-chooses-a-budget-to-rebuild-britain?ref=europeans.today#:%7E:text=The%20Budget%20will%20help%20rebuild,road%20maintenance%20in%202025%2D26.). ### 3\. Infrastructure projects Reeves also committed to funding a number of high-profile [infrastructure projects](https://assets.publishing.service.gov.uk/media/672232d010b0d582ee8c4905/Autumn%5FBudget%5F2024%5F%5Fweb%5Faccessible%5F.pdf?ref=europeans.today). On transport, the TransPennine Route upgrade, East West Rail, and HS2’s link into central London were all green-lit. She also [promised **£5 billion**](https://www.architectsjournal.co.uk/news/budget-rachel-reeves-pledges-funding-for-housing-hs2-and-schools?utm%5Fsource=WordPress&utm%5Fmedium=Recommendation&utm%5Fcampaign=Recommended%5FArticles#:%7E:text=The%20government%20will%20invest%20%C2%A3,first%20five%20years%20in%20power.) to build **1.5 million** new homes in five years. Additionally, **£20.4 billion** in R&D funding was also protected in the budget. ### 4\. Regional growth The budget highlighted the importance of [regional growth and place](https://www.theguardian.com/uk-news/2024/oct/30/budget-2024-key-points-at-a-glance?ref=europeans.today), reflecting Labour’s emphasis on continued devolution [since taking office](https://www.gov.uk/government/news/deputy-prime-minister-kickstarts-new-devolution-revolution-to-boost-local-power?ref=europeans.today). Reeves has committed to providing an extra **£6.6 billion** to the devolved nations through the [Barnett formula](https://www.bbc.co.uk/news/articles/cdxl1zd07l1o?ref=europeans.today). She also revealed that the [West Midlands and Greater Manchester](https://www.theguardian.com/uk-news/2024/oct/30/budget-2024-key-points-at-a-glance?ref=europeans.today) would receive integrated financial settlements from 2026-27\. These moves indicate some ambition and long-term vision around empowering devolved governments to drive regional economic growth. ### 5\. Public services Another long-term focus of the government has been “fixing the foundations” of Britain’s [public services](https://www.theguardian.com/politics/article/2024/jul/17/starmer-pledges-to-fix-the-foundations-of-the-country-in-labours-kings-speech?ref=europeans.today). Reeves linked low levels of investment to [crumbling services](https://www.theguardian.com/uk-news/2024/oct/30/budget-2024-key-points-at-a-glance?ref=europeans.today). As such, she committed to significant spending on education and health, alongside **£1.3 billion** to address the crisis of [local government funding](https://www.lgcplus.com/finance/budget-live-latest-news-and-reaction-from-local-government-30-10-2024/?ref=europeans.today). These measures signpost a renewed interest in an [industrial and economic strategy](https://www.instituteforgovernment.org.uk/comment/invest-2035-promising-launch-industrial-strategy?ref=europeans.today) to address Britain’s economic weaknesses and drive growth. Both require a focus on the medium and long term. ### **Remaining challenges** Collectively, these measure suggest some long-term thinking by Labour, but do they go far enough, and will they stick? Delivering on a long-term industrial strategy requires greater [coordination across government](https://www.instituteforgovernment.org.uk/comment/lessons-successfully-restarting-industrial-strategy?ref=europeans.today), especially between the Treasury and the Department for Business and Trade. But other departments too, will be key to driving long-term growth and must be brought on board with Labour’s approach. And while the integrated financial settlements will empower the West Midlands and Greater Manchester, the approach stops short of fully downloading financial independence to the regions. A focus on selective regions also only adds to [existing asymmetries](https://academic.oup.com/pa/article/77/4/735/7728377?ref=europeans.today) in the powers regions have. A systematically thought-out approach that covers the whole UK would go further, but remains remote. Finally, while the government has spent big on education and health, real departmental funding is only set to [rise by **1.5%**](https://www.ft.com/content/370ce0db-bff9-435a-8aa4-0a6d0e9f4e6e?ref=europeans.today). Pre-budget, [concerns were raised](https://www.ft.com/content/fc00e578-f45c-4794-a2c7-5312d6c52f71?ref=europeans.today) about the effect tight funding settlements might have for non-protected departments, especially when these cuts come to bite [in 2028-29](https://www.civilserviceworld.com/professions/article/budget-2024-unprotected-departments-14-cuts-2026-ifs-obr?utm%5Fmedium=email&utm%5Fcampaign=31%20Oct%20Zaizi%20webinar%20IM%20research%20report%20HPE%20case%20study%20PT%20%20OK&utm%5Fcontent=31%20Oct%20Zaizi%20webinar%20IM%20research%20report%20HPE%20case%20study%20PT%20%20OK+CID%5F468e06e84a917a3d4c10dbce17aadd7b&utm%5Fsource=Email%20newsletters&utm%5Fterm=Budget%20Unprotected%20departments%20facing%2014%20cuts%20from%202026%20IFS%20warns). The spectre this raises for Labour is that a short-term squeeze on day-to-day departmental spending risks undermining the work it has done to secure long-term investment for growth. ![PUBLIC SQUARE UK](https://storage.ghost.io/c/15/40/1540bec0-7154-4feb-b8e1-97f579155b08/content/images/2021/09/end-flat-1.png "PUBLIC SQUARE UK") ### --- ### **Sources:** ##### ▪ This piece was originally published in [The Conversation](https://theconversation.com/five-ways-the-budget-shows-rachel-reeves-is-thinking-long-term-more-than-the-tories-ever-did-242399?ref=europeans.today) and re-published in PUBLIC SQUARE UK on 3 November 2024\. | The author writes in a personal capacity. ##### ▪ **Cover:** Flickr/[HM Treasury](https://www.flickr.com/photos/hmtreasury/54104867899?ref=europeans.today). (Licensed under a [Creative Commons Attribution-ShareAlike 4.0 International License](http://creativecommons.org/licenses/by-sa/4.0/?ref=europeans.today).) ![Creative Commons License](https://i.creativecommons.org/l/by-sa/4.0/88x31.png "Cover photograph license") --- ![The Conversation](https://counter.theconversation.com/content/242399/count.gif?distributor=republish-lightbox-basic)