Sir Keir Starmer stepped down as Prime Minister last month, acknowledging responsibility for what he described as a series of missteps by the Labour government, though critics have pointed to key figures within his administration as bearing significant blame. Among them, Chancellor Rachel Reeves has been singled out for a number of controversial fiscal decisions that some analysts say contributed to Labour’s recent political setbacks.

Ms. Reeves’ tenure as Chancellor was marked by a series of policy reversals and tax increases that drew public criticism and internal party dissent. Early in her term, she identified a £22 billion deficit in government finances and responded by halting the long-standing £200 winter fuel payment to pensioners, a move that triggered widespread backlash. Although the payment remained available to pension credit recipients, many pensioners faced difficult choices between heating and other essentials. Following mounting pressure and poor local election results for Labour, Reeves announced a partial reinstatement of the benefit, covering approximately 75 percent of eligible pensioners.

Her approach to taxation also shifted during her time in office. While initially emphasizing economic growth, Reeves later raised National Insurance contributions for employers from 13.8 percent to 15 percent and lowered the salary threshold subject to these contributions from £9,100 to £5,000. The national living wage was increased to £12.71 per hour, a policy critics argue exacerbated youth unemployment and increased labor costs for businesses. Additional measures saw the removal of pandemic-era business rates reliefs, which particularly affected sectors like hospitality. After pushback, a special exemption was introduced for pub landlords to ease tax burdens.

Another significant U-turn involved inheritance tax plans for family farms. Announced in October 2024, the policy initially aimed to impose a 20 percent inheritance tax on farming estates valued over £1 million. Opposition from Labour MPs and concerned stakeholders led to a revision in December 2025, raising the threshold to £2.5 million and allowing couples to pass on estates up to £5 million tax-free. Nonetheless, official figures indicate that since the initial announcement, 6,270 businesses in agriculture, forestry, and fishing have closed.

The issue of student loans also escalated into a political controversy under Reeves. By freezing the income threshold at which graduates start repaying their loans at £29,385 for three years, the policy effectively increased repayment burdens. This sparked a parliamentary inquiry that found loans were mis-sold to approximately five million borrowers. The government projects this measure will generate £7.4 billion by 2030-31. Critics have characterized the policy as a “stealth tax” disproportionately affecting younger generations, raising questions about its future under the incoming leadership of Keir Starmer’s successor, Andy Burnham.

Welfare spending remained a central concern during Reeves’s chancellorship. Notably, spending on Personal Independence Payments is forecast to reach £41 billion by the end of the decade. A review led by Social Security Minister Sir Stephen Timms reportedly opted not to explore cost-cutting measures. Overall, welfare expenditure is expected to increase by 19 percent to £373.4 billion over the current parliamentary term, with working-age health and disability benefits rising by 30 percent to nearly £98 billion.

Meanwhile, tax revenues from income tax and National Insurance hit £153.7 billion in the first two months of this fiscal year, nearly £10 billion higher than in the prior year. Despite prior manifesto commitments to avoid tax increases on working people, Ms. Reeves extended income tax thresholds freezes through 2031. This effectively pushes more workers into higher tax bands, potentially offsetting pay raises.

As Andy Burnham prepares to assume the role of Prime Minister, he faces the challenge of managing public finances amid these complex dynamics. Reports indicate he is considering further tax increases, a path which may invite similar criticisms regarding the balance between controlling welfare spending and taxing working citizens. The forthcoming government strategy will likely be scrutinized for its approach to fiscal responsibility and social support.