Rachel Reeves is not repeating George Osborne-style austerity, according to Simon Wren-Lewis on his Mainly Macro blog today (May 21, 2025).

But is that right? Would it not be more accurate to say that she is following the spirit of Osborne austerity, if not the form?

Professor Wren-Lewis argues that, while Osborne slashed public investment and imposed sweeping departmental cuts during a demand-side recession, Reeves is operating in a different economic context (supply-side stagnation) and following a different fiscal philosophy — one closer to Gordon Brown’s “Golden Rule” than Osborne’s deficit fetishism.

Wren-Lewis praises Reeves for raising public investment plans to flatline rather than decline (as Osborne did), and for resisting the Conservatives’ trick of setting traps for Labour via implausibly tight post-election spending targets.

He concedes that Reeves has done “much less than I would have liked,” but insists that “it is not because she is following in Osborne’s footsteps.”

But does this really hold up when we look beyond economic theory and consider the political and social reality on the ground?

The spirit of austerity lives on

It may be true that Reeves isn’t following Osborne’s form.

But she is unquestionably conforming to the spirit of austerity — a politics of scarcity, of fear of taxation, of appeasing the powerful and punishing the powerless.

For all the rhetorical shifts, the basic outcomes remain disturbingly familiar:

• Departmental budgets are frozen in real terms, despite the crumbling state of public services. Local councils are going bankrupt, the justice system is in disrepair, and the NHS remains overstretched — and Reeves offers no serious fiscal path to change that.

• The poorest are still bearing the brunt. Reeves has refused to scrap the two-child benefit cap, one of the most punitive and socially regressive policies left by the Tories. She has shown no inclination to lift Universal Credit rates or ease sanctions. Like her predecessors, she finds it politically easier to extract from the bottom than to challenge the top.

• No bold tax reform. Wren-Lewis rightly notes that Reeves’s greatest failure is her refusal to raise taxes, particularly on the wealthy. But while he traces this to Labour’s long-standing fears since their 1992 defeat, what matters now is that this fear has paralysed the party. If Reeves won’t tax wealth or raise the top rate of income tax, where does the money come from? The answer, depressingly, is nowhere.

Tough on the poor, timid with the rich

The blunt reality is that Reeves and her leader, Keir Starmer, have adopted a politics that punches downward.

Out of fear of unsettling the rich — or the media class that defends them — they have decided it is safer to target those least able to fight back.

This isn’t the austerity of George Osborne in name or design.

But it is austerity in function — and, crucially, in consequence.

Reeves may not be cutting spending further, but she is presiding over continued managed decline.

She’s locking in the low expectations set by the last 14 years and treating them as the new baseline.

Prof Wren-Lewis, from an economist’s standpoint, is not wrong to separate Reeves from Osborne.

But politics is not just about macroeconomic frameworks.

It’s about choices, priorities, and courage.

And on all three fronts, Labour is failing to offer anything transformative.

Labour is the school bully of modern politics

If politics were a playground, Labour under Reeves and Starmer would be the school bully — not because it’s strong, but because it picks on the weak while avoiding conflict with those who might fight back.

Their refusal to challenge the rich, to tax unearned wealth, to properly fund social care, housing, or local government, is not just timidity.

It’s complicity in an economic order that continues to reward the wealthy while leaving millions behind.

Labour has chosen caution over conviction.

And while ministers may have ditched Osborne’s branding, they’ve kept his instincts: punish the poor, appease the press, and promise as little as possible.