Rachel Reeves seems surprised she has already run out of other people's money to spend, as if the state budget troubles had nothing to do with her.
In her autumn budget, she put up annual spending by a massive £70billion, and taxes up by an unaffordable £36billion. This created her very own large black hole to be filled by borrowing from an increasingly worried bond market.
The cost of government borrowing for the longer term is well above the levels reached briefly in the Truss month of 2022 when Rachel said the rate rises had crashed the economy. In 2022 30 year money hit 4.8 per cent for one day before falling.
All this year, under Reeves, it has been well above five per cent, reaching a high so far of 5.5 per cent. No wonder the Reeves budget has to allow more than £100 billion just to pay interest on what the state has already borrowed.
Badly run government departments and nationalised industries are already back for more money. The NHS wants another large injection of cash.
The Home Office needs an ever-growing fortune to put thousands of extra illegal migrants up in expensive hotels, and to find subsidised homes and benefits for the many who are granted leave to stay on.
The Deputy Prime Minister needs billions to build cheaper homes to accommodate everyone arriving here or already here on low and no incomes. The steel industry will need big subsidies to keep going. The nationalised Post Office will carry on losing a packet.
The Bank of England sends a bill for £20bn or £30 bn each year to pay for its over-the-top losses on bond trading. Nationalised HS 2 will carry on over budget with a much-delayed and truncated railway line.
The railways as they become fully nationalised, will be a very expensive pensioner of the state. On top of this Defence needs more just to pay for the important promises just made in the Defence Review, let alone the requirements of NATO to go much further than that
Rachel Reeves has less than 24 hours to wield the axe or face it - John Redwood
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So what should she do? She should start by taking the axe to avoidable and wasteful spending. There is so much of it. Tell the Bank to curb its losses.
Tell the Post Office there will be no bonuses and likely loss of senior jobs if they persist in losing money. Tell the Home Office to cancel the £500million to France as they fail to stop the boats. Tell them to cut the migration of low and no pay people more.
Tell the Cabinet Office there will be no money for the EU in return for minor tweaks to our trade deal. We do not pay other countries to trade or negotiate with us. Cancel the ruinous surrender of Chagos and the money for Mauritius. Tell the rail unions that more pay awards will require productivity deals.
They should earn more for smarter working. Stop recruiting civil servants from outside the service to let natural wastage reduce numbers. Costs go down by six to seven per cent a year if you just do that. Tell the Welfare Secretary to speed up the projects to get many hundreds of thousands of people to work instead of inviting in more migrants to fill vacancies.
What will she do? She will compromise and dither on many of the big issues. She will spend a bit more, borrow a bit more and leave open taxing a bit more for the autumn budget.
This is the worst possible outcome. There will be no decisive change in policy to stop so much illegal migration, nor in policy to get people to work.
There will be endless speculation about which taxes she will have to increase to pay for the incompetence of the government. She will fail to pick up the phone to the Governor of the Bank, to the CEO of the Post Office and HS 2 to get them to stem their losses.
She will hope the markets allow her to muddle through as the longer-term interest rates stay high, warning her that she is overdoing the borrowing. She expects the Bank to come to her rescue with further Base rate cuts, which will require a weak economy to justify them taking the risk with the inflation rate, which is currently 75 per cent above target.
Meanwhile, she is losing political credibility within her own party and government. She has been unable to make sensible cuts in the wasteful net zero budgets of Mr Miliband.
She sees the Prime Minister committing spending to the EU, Mauritius, the MOD and other causes which she can ill afford given the rest of the spending increase she has approved.
Markets and public opinion will not be kind to a Chancellor who cannot control spending, who cannot dictate priorities that reflect popular concerns and cannot keep borrowing down to realistic levels. Her cut to pensioner fuel is being partly reversed.
She may have to concede more to tackle the poverty of families with children, and she may find that the more state enterprises you have, the bigger the bills for their losses. Her changes to fiscal rules were meant to reassure, but they were a substantial relaxation in borrowing, and now prove to be difficult to stay within.
That means a nervous year of worry about more tax increases. They will do more damage to growth, lead to more enterprising people and businesses fleeing the UK and undermine the Chancellor's personal popularity still further. Think again, Chancellor. You are spending too much on the wrong things.
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