The six claims from Rachel Reeves that would never pass the test on a lie detector: ALEX BRUMMER

Rachel Reeves’s spending review was one of the most disingenuous statements I can remember in my long career as a financial journalist. In this deeply misleading review, the Chancellor used smoke and mirrors to disguise several key facts. A number of her claims would frankly fail a polygraph test.

1. She ‘stabilised’ the economy

Surely her most ludicrous and easily debunked argument is that she has brought ‘stability’ to the public finances. Despite her lofty paeans to ‘working people’ unemployment has soared by 276,000 since Labour took office. Meanwhile, bond yields – whose soaring prices collapsed Liz Truss’s disastrous administration in 2022 – are now the highest among the largest ‘G7’ economies. This suggests a deep distrust of Reeves in the only place that truly matters – the bond markets. Extra borrowing for what Reeves calls ‘investment’ – AKA, spending your and my money – will raise the Government’s interest bill to a gargantuan £126billion this fiscal year. That’s more than double the recently increased defence budget.

2. Bank rate cuts are down to her

Not for the first time, Reeves took credit yesterday for the fact the Bank of England has cut interest cuts four times since Labour came to power. This was an interpretation of reality that would have shamed Donald Trump. 

The reality is that the Starmer Government has mandated price increases on everything from energy and water bills to postage stamps, while prices elsewhere have soared thanks to Reeves’s damaging hike to employers’ national insurance contributions. It’s likely the Bank would have cut rates harder and faster were it not for Labour’s approach.

3. The R&D investment that was really a cut

Reeves was right to note that research and development underpins Britain’s world-leading universities and research institutions. With great fanfare, she claimed that the Government is increasing R&D spending to £22.6billion a year. The reality is somewhat different. Firstly, almost all that sum was in fact committed by Boris Johnson’s government some time ago. 

And, although she has raised the cash element by a modest £500million a year, in real terms this represents a cut thanks to inflation. Meanwhile, even by the most generous measures, Britain’s commitment to R&D stands at 2.7 per cent of national income. That is close to the OECD average – but it’s way below the world’s most tech-savvy economies such as the US and Israel, who are fast outstripping us.

Reeves’s approach to the public finances has all the credibility of what George Bush Snr once described as ‘voodoo economics’, writes Alex Brummer

4. Supercomputer U-turn

Perhaps her most laughable bit of trickery was in announcing government investment in the so-called ‘Edinburgh Supercomputer’ – soon to be Britain’s most powerful such device. She must have hoped we had all forgotten that one of her first actions in government last July was to axe the Tories’ commitment to building this £800 million machine at Edinburgh University – but yesterday, in a largely unnoticed U-turn, Reeves pledged £750 million to the same project, declaring it a ‘landmark’ investment that would ‘unlock a decade of renewal via artificial intelligence’. I’m sure the money will be welcome up in Auld Reekie – but this entire pledge was somehow typical of the Government’s misleading approach.

5. She’ll reach defence spending target

The Chancellor gave her best Winston Churchill impression as she committed new sums to the defence of the realm. By repurposing overseas aid, she has managed to boost military spending up to 2.6 per cent of GDP by 2027. 

But her goal of reaching 3 per cent by the next Parliament remains totally unfunded without massive tax increases or a meat axe to the welfare bill. As for reaching the 5 per cent suggested by Nato leaders, forget it. The NHS and public sector workers have drunk the reservoir dry.

6. Enough social houses will be built

Reeves pledged £39billion over the next decade to build council houses, leading Housing Secretary Angela Rayner to smile like a Cheshire cat. Both women surely know this won’t come close to meeting Britain’s social housing demands. 

The highly regarded NIESR think tank points out that the £3.9billion a year being offered ‘is a stark contrast to the call from local authorities for £11.8billion a year needed from the Government to build 90,000 social rent homes’.

Reeves’s approach to the public finances has all the credibility of what George Bush Snr once described as ‘voodoo economics’.