Denis Healey’s ‘caretaker Budget’ on 3 April 1979 is an odd focus for Labour nostalgia. It came a week after Jim Callaghan’s government had lost a vote of no confidence, paving the way for Margaret Thatcher’s arrival in No. 10. Healey was reduced to merely introducing the finance bill to maintain normal tax collection functions, and made no other announcements at all. But as chaos surrounds Rachel Reeves’s second Budget next week, one senior figure fondly recalled that simpler time.

Healey began his 27-minute ‘non-Budget’ (as Geoffrey Howe called it) speech by confessing: ‘I feel a little bit like a man who turns up to play the leading role in the opera and all they want him to do is to help them hold the scenery together.’ In truth, holding the scenery together is the best that the City, the markets and business can hope for from next week’s Budget.

‘The Chancellor has to land a dodgy jumbo jet on the postage stamp of a highly uncertain forecast’

Reeves and her Treasury team have created months of chaos and confusion. Endless potential tax rises on mansions, pensions, savings, gambling and business partnerships have been trailed, briefed and leaked, damaging the economy and making the Chancellor’s task more difficult. This culminated in a Reeves speech designed to roll the pitch for a 2p rise in income tax, which was only ditched last week when the Office for Budget Responsibility (OBR) told Reeves she had £10 billion more to play with. It was the capstone of what Lindsay Hoyle, the Commons Speaker, branded ‘the hokey-cokey Budget: one minute something is in, the next minute it is out’.

A lot of blame can be placed at Reeves’s door. This year and last she waited far too long to announce her plans, allowing damaging speculation to spiral. However, the rot runs deeper. Serious voices are questioning whether it is time to blow up the Budget as we know it.

Former mandarins are also openly asserting that the Treasury itself is dysfunctional and should be broken up. Simon Case, the previous cabinet secretary, says: ‘Former chancellors, governors of the Bank of England and senior officials are now talking about the madness of our current processes.’

‘We’ve known for months that the Chancellor needed to raise tax,’ says a serving senior civil servant. ‘If Argentina invaded the Falklands again tomorrow, Keir Starmer would not wait six months to tell the public what he was going to do about it.’

Every incautious remark and U-turn has caused measurable damage. When Starmer reversed plans to cut winter-fuel payments for pensioners, ten-year gilt yields jumped sharply. Had that increase been sustained, it would have added an estimated £2.1 billion to debt-interest costs over the coming years. When the government backed away........

© The Spectator