Rachel Reeves has admitted that hardworking people feel “stuck” as economic growth continues to lag and pressure mounts on her to raise new taxes.
In stark comments on the state of Britain’s economy, the chancellor acknowledged that families are “squeezing every penny to make ends meet” and that more needs to be done to help working people “get ahead in life”.
But a defiant Ms Reeves also hit back at critics such as Nigel Farage who claim that “Britain is broken” – insisting she was working to boost the economy and “build a stronger Britain”.
Writing exclusively for The Independent, she said: “Britain isn’t broken, but for working people, it feels stuck.
“People feel like no matter how hard they work, or how much they put in, getting ahead in life is out of reach, and families are squeezing every penny to make ends meet.”
Ms Reeves made the comments as she unveiled plans to help working parents with the “sky-high cost” of childcare as part of an attempt to break the continuing cost of living crisis.
The announcement is the first in a week focused on education and tackling the migrant crisis, but also part of a wider fightback by Labour to seize the political initiative as it trails Farage’s Reform UK by around eight points in the latest polls.
The chancellor, who is expected to announce the date of her second Budget on Wednesday, has tackled head on criticism that things in the UK are not working for those who put in the effort and insists her childcare funding changes are “just the start”.
“My number one focus is on putting more money in working people’s pockets,” she wrote.
“The childcare rollout is helping deliver that. The Office for Budget Responsibility (OBR) predicts that – by 2027 – the additional help will get 60,000 parents back to work. That is a huge boost to the economy, which will drive up living standards.”
As a mother of two herself, Ms Reeves openly admits that the reforms she is unveiling are personal to her in the way she has had to balance work life and home life as a parent.
She said: “It is one of my personal missions for this government that every child has the same opportunities to thrive no matter what their background or the financial position of their family.
“People across the country have been let down by successive governments who have not done their part in making that happen.”
But the announcement comes in the run-up to a Budget where one set of economists has warned she may need to go to the International Monetary Fund (IMF) for a bailout. Others are pushing for new taxes such as the gambling levy or mansion tax, while some warn she will have to break her promise not to raise income tax, VAT or national insurance on already struggling working people.
The chancellor wants to instead bring in measures which will help people back into the workplace and in turn help to boost growth in the UK and provide a solution to the £41.2bn black hole one think tank claims she is facing.
She wrote: “For too long, parents – particularly mums – have been held back by the sky-high cost of childcare.
“It’s unfair on families who struggle to balance work and home life whilst trying to make ends meet.
“And it has been a drag on the whole country. When parents can’t work the hours they want, businesses lose out on talent, economy grows more slowly, meaning fewer pounds in pockets.”
The changes will mean that eligible working parents in England will be able to access 30 hours a week of free childcare for children older than nine months from Monday 1 September.
Ms Reeves said: “That’s a saving of up to £7,500 a year per child – money that will make a real difference at a time when every penny counts.”
But the National Foundation for Educational Research (NFER) has warned that nurseries may not have the staff to fulfil the commitment.
The researchers said workforce challenges must be addressed to ensure the early years sector can recruit and retain staff to meet the demands of the full rollout of the expansion.
The NFER report said: “The early years workforce has grown significantly in recent years, but providers still face significant staffing, recruitment and retention challenges.”
The government estimated last year that the early years workforce would need to grow by 35,000 staff from December 2023 to September 2025 to deliver the full rollout of the expanded funding entitlement.
But the NFER said early years providers have reported challenges with achieving growth, and further expansion “may be even more challenging”.
One of the challenges early years providers face in recruiting and retaining staff is that pay is low compared with the general workforce, the report said.
It comes as a Labour Party grandee has warned that Sir Keir Starmer and Ms Reeves “have lost the working class”.
Lord Maurice Glasman, founder of the influential Blue Labour group, has told The Politics Inside Out podcast, hosted by former MPs Gloria De Piero and Jonathan Ashworth, that Labour has become a middle-class party and needs to win over the working class again if it hopes to maintain power.
Lord Glasman, who is believed to influence the prime minister’s chief of staff Morgan McSweeney and was a guest of JD Vance’s at January’s presidential inauguration, said: “Beginning in the Sixties, but certainly consummated with Tony Blair in 1997, the working class became irrelevant [to Labour]. It was globalisation time. It was [the view that] ‘the only thing wrong with Thatcher was she wasn’t really good on welfare and education’.”
He claimed that Labour’s attitude to the working class became “we need to teach them to read Harry Potter, we need to tell them to go to university. That’s the answer. It doesn’t matter what they study. Social mobility became how far away you could move from your mum, you know, a whole load of assumptions.”
He warned that the working class had turned to Reform UK and Farage instead, but were “not fascist” for supporting Brexit.
Lord Glasman continued: “My sense is that there is a genuine anger towards Labour from the working class. That [Labour is] considered a bit like an unfaithful husband who kind of goes back to the constituency and pretends to be at home, but really they can’t wait to get back to London and go on foreign travel.”
