326. Rachel Reeves

Summary

Iain Dale All Talk – Episode 326: Rachel Reeves (August 6, 2025)

Episode Overview

In this dynamic episode, Ian Dale sits down for an in-depth conversation with Rachel Reeves, the first female Chancellor of the Exchequer. They discuss her path to power, the unique pressures and symbolism of being a pioneering woman in government, major challenges confronting the UK—ranging from defence spending and NHS reform to the cost of living and the challenge from political rivals—and the realities of political and personal scrutiny. Rachel also reflects on her family background, her approach to economic decision-making, inter-party relationships, work-life balance, and the generational challenge of instilling hope in young people.

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Key Discussion Points and Insights

1. Breaking the Glass Ceiling as First Female Chancellor

• Historical Context & Ambitions

  • Rachel expresses pride in being the UK's first female Chancellor, highlighting the significance for women’s representation:

    “The position of Chancellor has existed for more than 800 years and never in that time has there been a woman doing the job. And I think it was about time … I feel very proud to be that. But it shouldn't have taken 800 years to get there.” [02:06]

  • She underscores the importance of role models:

    “…I hope that young women and girls growing up today would see that there should be no ceiling on their ambitions and nothing that they can't achieve.” [04:14]

• Symbolism and Pressures

  • Discusses the impact of visible leadership and why it matters for girls' expectations.

    “…there’s something important about having women in those roles.” [04:07]

  • On Margaret Thatcher and other female PMs:

    “Although I remember at quite an early age, like from what my parents said and stuff, didn't agree with what she was doing, but I guess I never doubted that a woman could do that job, because there she was, doing the job.” [03:41]

2. Early Political Influences & Family Background

• Reeves reflects on the formative role her family, upbringing, and the 1997 Labour landslide played in her political trajectory:

  “I remember in 1987… I went home and I asked my dad and he put on the six o' Clock News and he said, that's Neil Kinnock and that's who we vote for.” [06:08]

  • Both she and her sister Ellie (also an MP) joined Labour as teenagers, motivated by a belief that their state schooling was short-changed:

    “My sixth form was two prefab huts in the playground… I felt very strongly that the government we had in the 90s didn't care very much about schools like mine and communities like mine.” [08:03]

3. Mentors, Memories, and Gordon Brown

• Reeves recounts mentorship by John Speller and her admiration for Gordon Brown—sharing anecdotes about his support and sense of humour:

  “My lovely friend Helen… bought me a framed picture of Gordon Brown…” [10:19]

  • Keeps in regular contact with Brown, who offers long, idea-heavy emails:

    “He doesn't phone me, he sends me emails quite a lot in capital letters and then really long papers.” [12:13]

  • On Alastair Darling’s legacy and transition to being the only living Labour Chancellor:

    “Gordon is now the only former Labour Chancellor still alive.” [12:54]

4. The Hard Choices of Office: Budgets, Spending, and Disappointment

• Reeves reflects on the burdens and limitations of her job:

  “People are impatient for change. I’m impatient for change as well, but I've also got the job of making sure the sums always add up and that doesn't always make you popular…” [14:41]

Cabinet Negotiations & Spending Reviews

• Reeves describes the challenge of balancing ministerial departmental demands:

  “Everybody put in for more money than they...” [17:56]

  • NHS and Defence negotiations are prioritised due to their scale and shifting global context:

    “We needed to sort of settle the NHS pretty quickly because it is by far the biggest spending department…” [18:01] “We’re taking defence spending to 2.6% by 2027.” [18:44]

Defence Spending & War Readiness

• Reeves justifies increased defence spending given shifting global threats:

  “The threat after 9/11 was more around terrorism, but it is now state actors that are our biggest threat.” [22:00]

  • UK’s commitment to alliances:

    “…We are the biggest defence spender in Europe. Work closely in terms of security partnership. There's no greater partnership than between the US and the UK…” [22:36]

5. Global Trade, Brexit, and Investment

• The UK’s improved trade deals and increased private investment post-Brexit are points of pride:

  “We have the best trade deal of any country in the world now with the US… £120 billion of private investment into the UK since the general election last year. That is very significant.” [23:19 & 24:27]

  • On GB Energy and energy investment:

    “One of the things it's done is put load of solar panels on the roofs of schools to cut their energy bills.” [25:36]

6. Climate, Energy, and the Reform Challenge

• Reeves sets out Labour’s position on energy security and the need to win the argument for net zero:

  “One of the reasons we were so exposed to Russia's invasion was that we were very reliant on global markets for our basic energy needs… first and foremost it's about energy security.” [26:52]

  • She critiques the anti-net zero turn by Reform and the Conservatives:

    “They come out with all sorts of conspiracy theories… But his [Farage’s] change is a mirage and we are trying to get on and deliver.” [28:11]

7. Political Threats: Reform UK & the Fragmented Left

• Reeves anticipates Reform as Labour’s main challenger, not the Conservatives:

  “There's been a lot of tactical voting to stop the Tories… I think you will find in England especially… people who want to stop Reform will coalesce to get around the party who are best placed to do that.” [33:23]

• On the new “Jasbullah Party”:

  “[Corbyn] tried to destroy my party. He can now go and set up his own party. The country has rejected him twice. The bloke's got a big ego. He can have another go, but I think the country will give the same verdict.” [36:15]

8. Relationships: Across Parties & Within Government

• Reeves has connections across the political spectrum:

  “I do get on well with a number of Conservatives… I'm actually, I think, less tribal now than when I first became an MP…” [38:04]

  • Personal relationship with the Prime Minister is close and essential:

    “We see each other every day. We text. He doesn't use WhatsApp… our lives are now very closely intertwined because we both live above the shop.” [50:35]

9. Health Service & Public Sector Strikes

• Frustration at slow NHS progress and strikes despite significant investment:

  “Last year we did a pay settlement for the resident doctors worth 22%... I think the offer we've made to resident doctors is more than reasonable and I would encourage them to get back to work…” [31:23]

10. Young People: Hope, Opportunity, and Listening

• Reeves acknowledges the crisis in youth optimism, housing access, and the effects of COVID-19:

  “You know, I can understand why 18 to 24 year olds think I'll never get the housing ladder… we've put up the stamp duty on people buying second homes because as we build those homes we want ordinary people, young people to be able to get them.” [43:19]

  • On COVID and its impact:

    “…for a young person, for my kids, or for somebody, you know, in their early 20s, their most formative years were spent in the house with two or three other people… And so I absolutely understand why a lot of young people feel that things are just not working for them today.” [46:24]

11. Reflections, Criticism & Work-Life Balance

• The hardest thing about being Chancellor?

  “That personal scrutiny is something that even when I was Shadow Chancellor and having been an MP for 14 years before I got into government, it's that stuff which I find hard…” [66:17]

• On work-life balance and being a mother in high office:

  “You would never have said that to Rishi Sunak or Jeremy Hunt… but I think they're also proud of what their mum does.” [63:43]

12. Notable Lighter Moments & Personal Stories

• The “orange hair” crisis before a Budget becomes a running joke:

  “It was dark at the time, which is my natural colour. And then it sort of went orange… Then my kids came home… If I'm being kind, you look beautiful, Mummy. And if I'm being honest, what on earth have you done to your hair?” [67:29]

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Notable Quotes & Memorable Moments

• On Why Female Representation Matters:

  • “I hope that young women and girls growing up today would see that there should be no ceiling on their ambitions and nothing that they can't achieve.” – Rachel Reeves [04:14]

• On Budget Constraints:

  • "People are impatient for change. I'm impatient for change as well, but I've also got the job of making sure the sums always add up and that doesn't always make you popular..." – Rachel Reeves [14:41]

• On Net Zero & Farage:

  • “His change is a mirage and we are trying to get on and deliver.” – Rachel Reeves [28:11]

• On Crossing Party Lines:

  • “I'm actually, I think, less tribal now than when I first became an MP…” – Rachel Reeves [38:04]

• On the Labour–Reform Contest:

  • “I'm in no doubt that reform will be our rivals and as a result, you know, we've got to take our fight to them.” – Rachel Reeves [34:29]

• Balance and Motherhood in Politics:

  • “You would never have said that to Rishi Sunak or Jeremy Hunt… but I think they're also proud of what their mum does.” – Rachel Reeves [63:43]

• On Appearance and Media Scrutiny:

  • “If I'm being kind, you look beautiful, Mummy. And if I'm being honest, what on earth have you done to your hair?” – Rachel Reeves recounting her son’s words [67:29]

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Timestamps for Key Segments

• Introduction and Mission (No “14 wasted Tory years”): [00:33–00:52]
• On being first female Chancellor: [01:26–04:14]
• Political upbringing and early memories: [05:13–08:03]
• Mentors and Gordon Brown stories: [10:19–13:12]
• Balancing expectations and budget prioritisation: [14:05–16:57]
• Defence spending and UK’s global posture: [19:13–22:54]
• UK trade, investment, and GB Energy: [23:16–25:36]
• Energy security, cost and net zero backlash: [26:22–29:39]
• Rise of Reform and future electoral battles: [29:39–35:07]
• Personal cross-party relationships: [37:00–39:00]
• PMQs, tears, and public scrutiny: [39:00–42:13]
• Youth, aspirational Britain, and housing: [42:13–47:45]
• Cabinet standouts & PM-Chancellor relationship: [47:45–51:20]
• Tax policy, regrets, and economic stability: [51:50–59:20]
• Health service wins and frustrations: [60:35–62:51]
• Personal release, motherhood, and public criticism: [62:51–66:17]
• The hair colour mishap: [67:14–70:18]

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Summary

This episode offers a candid, broad-ranging look at the realities of modern government, party politics, and personal cost at the top. Rachel Reeves presents herself as grounded, proud of her historic role, but realistic about the challenges Labour faces—both from a sceptical public and determined political rivals. Her humour, forthrightness, and commitment to social mobility and generational fairness shine through, whether she’s handling stories about Gordon Brown’s emails, addressing intractable public spending dilemmas, or laughing at her own hair-dye disaster.

For listeners seeking insight into the character, priorities, and instincts of a Chancellor coping with Britain’s shifting economic, social, and political landscape, this is an essential—and enjoyable—listen.

Transcript

[Ian Dale]

This is a Global Player original podcast.

Let me welcome our special guest, the Chancellor of the Exchequer, Rachel Reeves. You've got a little whoop then. Are you used to that?

[Rachel Reeves]

No.

[Ian Dale]

Now, this is your mission, should you wish to accept it over the next 70 minutes. Not to say the words 14 wasted Tory years.

[Rachel Reeves]

Does it upset you or.

[Ian Dale]

Not really, no. Or 22 billion black hole. Shall we see if we can get through without doing that?

[Rachel Reeves]

See how I get on? What else am I going to talk about?

[Ian Dale]

Do you have any Scottish roots?

[Rachel Reeves]

No, not that I'm aware of.

[Ian Dale]

But you've just spent. I mean, you came up yesterday. You were in North East Scotland yesterday doing a little tour. Do you spend a lot of time in Scotland?

[Rachel Reeves]

Well, my sister in law is here. Celia. Oh, hello, Celia. She lives in Edinburgh. So, yeah, we can't put.

[Ian Dale]

And fan's granny is here. Where's Margaret?

[Rachel Reeves]

Phoebe's grandma Margaret. Hello, Margaret. Little fan club at the front. Were you whooping, Margaret?

[Ian Dale]

No, the whooping I think came over from here. So let's get into some of the nitty gritty. Well, actually, let's start off with your background, because you are the first woman Chancellor. You always said that was your ambition, to be the first female Chancellor. You beat Andrea Ledsom to that. That must make you feel really good.

[Rachel Reeves]

Was Andrea Ledsome going to be Chancellor?

[Ian Dale]

No. Well, don't you remember back in 2016 when she was going to form a joint ticket with Boris Johnson and Michael Gove, her demand was to be Chancellor of the Exchequer and Boris said no. So you've got something to thank Boris Johnson for. Why was that your ambition?

[Rachel Reeves]

I just wanted to be a female Chancellor, so if there had been one before, that would have been great. But the position of Chancellor has existed for more than 800 years and never in that time has there been a woman doing the job. And I think it was about time that we had a female Chancellor Exchequer. Obviously, I'm delighted it's me and that's something that I will always cherish and I feel very proud to be that. But it shouldn't have taken 800 years to get there. You know, like when you walk up the stairs at 11 at 10 Downing street, you've got the pictures of all the prime ministers and obviously 1979 might not have agreed with her, but we had a female Prime Minister and we've had three in total. You walk up the number 11 stairs, every picture is of a man and one day there will be a picture. Hopefully a long time in the future. When I finish A Chancellor. There'll be a picture of me there. And I. Yeah, I am proud of that. Of course.

[Ian Dale]

Whatever your politics are, I think everyone can agree that Margaret Thatcher proved that she could do the job, because in 1979, there were so many people that didn't think a woman could do the job of Prime Minister. And I remember, I think I was 16 at the time, watching her final party political broadcast in that election campaign, and she just looked straight down the camera lens for 10 minutes, basically trying to reassure people that a woman could do the job. Now, times have moved on from then, but there have been two subsequent female Prime Ministers who, can I put it this way, haven't been quite as successful. How much pressure do you feel to be a success as the first woman Chancellor?

[Rachel Reeves]

First of all, let me say something about Margaret Thatcher, because I was born in 1979 and I remember growing up and she was Prime Minister, and although I remember at quite an early age, like from what my parents said and stuff, didn't agree with what she was doing, but I guess I never doubted that a woman could do that job, because there she was, doing the job. I also remember when my children were born, they were born when David Cameron was Prime Minister, but the first memory they have as a Prime Minister is of Theresa May. And when she stopped being Prime Minister, they're like, oh, so we haven't got a woman Prime Minister now. And again, they thought that that was normal, having a woman in that role. And so I do think there is something important, and I think the symbolism of having a female Chancellor is also important. You know, I started my career at the bank of England and then I worked in finance and there weren't very many female leaders. You know, we've never had a governor at the bank of a female governor at the bank of England. There weren't very many women leading banks. And so I do think there is something important about having women in those roles. And I said in my first speech when I became Chancellor that I hope that young women and girls growing up today would see that there should be no ceiling on their ambitions and nothing that they can't achieve. And certainly through my life, I've had a lot of female role models who I think I owe a lot to them, making my path a little bit easier. And I hope that I, in some way can do the same.

[Ian Dale]

My niece Emma was, I think she was born in the same year as you. And I remember about 1987, when she would have been, what, seven or eight, she said to me, uncle Ian, Can a man be Prime Minister?

[Rachel Reeves]

Oh, yeah, exactly.

[Ian Dale]

And that really drove home to me the importance of what Margaret Thatcher had achieved.

[Rachel Reeves]

I also remember 1997, when there were 120 women elected and 101 of them were Labour. And it was the first time, I guess, I'd really seen women like me becoming MPs. And that was a really important moment for me as well, because we sort of think, well, maybe I could one day do something like that in a way that I don't think I would have thought without that big change in Parliament taking place.

[Ian Dale]

And was politics a big thing in your home as a child? Because obviously your sister is also MP and minister. I mean, instead of playing Barbie, were you playing some sort of political game.

[Rachel Reeves]

Which Barbie's going to be Prime Minister? No, we didn't do that. My mum and dad, they weren't members of a political party, but they were definitely. That was good. But my dad especially was interested in politics. And I remember in 1987, it was year of the general election, and there were girls at school talking about who their parents were going to vote for. And I was really ashamed. I had no idea what they were talking about. Didn't know about the election, didn't know really anything about politics. I went home and I asked my dad and he put on the six o' Clock News and he said, that's Neil Kinnock and that's who we vote for. And I told this story in an interview not long after I'd been elected as an mp, and my dad messaged me the next day and he said, I don't think that story can be true. And I was like, well, you did vote for Labour, dad, you didn't vote for Thatcher, did you, in 1987? And he went, no, but if it is true, it's the first time you've ever done anything I told you to do. So that's sort of my first political memory, but I don't know why. But then going from, like, not even knowing there was an election or anything about it, and then my dad putting on the 6 o' clock news, I then became really interested in politics and I did then listen to the news and Newsround and things like that, and I was genuinely interested.

[Ian Dale]

So who was presenting Newsround when you.

[Rachel Reeves]

Were a. I guess it'd be John Craven.

[Ian Dale]

Oh, it still was John Craven, because he was doing it when I was your age.

[Rachel Reeves]

I remember it being called John Craven's Newsround. So. So that was my. Yeah, so I started getting interested in politics When I was at school and I joined when I was in my sixth form.

[Ian Dale]

And what about. I don't know what the age difference is between you and your sister?

[Rachel Reeves]

Two years.

[Ian Dale]

Two years. So can you remember talking to her about politics at all?

[Rachel Reeves]

Yes. So we both joined ahead of the 1997 general election. I think I joined in 96. She would have joined a few months after me. So I joined when I was 16 or 17. 17. And Ellie joined when she was 15. And both of us then started campaigning in that election. You know, we were at the same school. I was in my sixth form. My sixth form was two prefab huts in the playground and they were baking hot in the summer and freezing cold in the winter. Our school library was turned into a classroom because there was more students than there was space and there were never enough textbooks to go around. I felt very strongly that the government we had in the 90s didn't care very much about schools like mine and communities like mine. And I wanted to do something about it. And for me, that was getting involved in politics. And Tony Blair in 97 was campaigning on education, education, education. That really resonated with me and it did with my sister as well. And our mum and dad were teachers. My mum had been a special needs teacher for a long time, but then there were all these cuts in budgets and so she became a classroom teacher. So, you know, she still had a good job and a good career, but the K she supported were no longer getting that extra support. And I just felt that things needed to change and I wanted to help get that change. I know it's not like normal to decide, right, okay, now I'm going to try and get a different government, but that was what I really wanted to do. And I went campaigning, Ellie went campaigning in that 97 election. And I guess we never really stopped.

[Ian Dale]

Who was the first big politician that you ever met?

[Rachel Reeves]

The first MP I ever met was John Speller, who you might not know, but he's sort of old, right? Labour mp, sort of trade union background, but he lived not far from me in South East London when I was growing up. And, yeah, I met him at a Labour Party event in Bromley and I was chairing the Bromley Young Labour. And, you know, he said we could come to Parliament to do an event. And, you know, he's always been a mentor and a supporter of mine, which I very much appreciated.

[Ian Dale]

So how did you get involved? I mean, was there a moment when you thought, I want to be an MP or I want to be Prime Minister or I want to be Chancellor. Can you trace that back?

[Rachel Reeves]

No. Like, when I was at university, I was interested in politics and I was involved in politics. Do you know the story about the picture of Gordon Brown?

[Ian Dale]

Go on.

[Rachel Reeves]

So my lovely friend Helen, who's from Glasgow, she was one of my best friends at university. For my 19th birthday, she bought me a framed picture of Gordon Brown. Other pinups were available, apparently, because they knew I was like, massively Labour and I was a big fan of Gordon and I had it on my bookcase in my room at university. So I was always, yeah.

[Ian Dale]

And do you still have it in your treasury office? You sort of touch it as you go into the office every day.

[Rachel Reeves]

No, but Gordon came into the treasury not long after I became Chancellor and it was really lovely. And one of the ministers showed him his old office and all the rest of it. He hadn't been back in the treasury since he'd stopped being Chancellor, you know, and obviously that was. What was that, 2007. So that's a long time. And he had a photo of me and the ministerial team and he said, you're also young. And I said, well, I think I'm about the same age that you were when you became Chancellor, Gordon. He goes, oh, I don't remember. I don't remember. I said, well, I'm 46. He goes, I just don't remember. A couple of minutes later, he went, I was actually 45. Okay, well done.

[Ian Dale]

That's actually a better impression of Gordon than Matt Ford does.

[Rachel Reeves]

I'm gonna see his show this evening, so if he needs a bit of help.

[Ian Dale]

But, I mean, how often does he give you a call? Because I could imagine if you're the current Chancellor of the Exchequer and you see on your phone the words Gordon Brown, you think, oh, shit, what have I done? How often does that happen?

[Rachel Reeves]

He doesn't phone me, he sends me emails quite a lot in capital letters and then really long papers. But, I mean, he is amazing. I mean, his work ethic and his commitment and passion, it's just never ending. Yeah, I was also, you know, I was very good friends with Alastair, Alastair Darling as well. And, yeah, he was a big supporter and a big, good friend of mine and his wife Maggie still is, and a lovely individual. Gordon is now the only former Labour Chancellor still alive. There's an awful lot of Conservative funds because they went through quite a lot in the last few years. 14 wasted years.

[Ian Dale]

You failed me.

[Rachel Reeves]

You failed me. Couldn't help myself.

[Ian Dale]

But when he does send you a missive Is it along the lines of Rachel, no, I'm not gonna try it. I think you've made a bit of a mistake.

[Rachel Reeves]

No, it doesn't do that.

[Ian Dale]

Have you considered this as an option?

[Rachel Reeves]

No, but he does have a lot of ideas and he writes a lot of papers about them. But he is an amazing man. I'm seeing him tomorrow. I do talk to him quite a lot.

[Ian Dale]

Well, can you put a word in? Because for five years I've been trying to persuade him, come and do this with me. And every year he. I really want to, but I can't do it this year. So if you can put a word in, I'll be really.

[Rachel Reeves]

That's what I'll do tomorrow. That'll be my first thing exactly.

[Ian Dale]

Being chancellor, I imagine you're probably lobbied more than any other government minister, because everyone either wants you to do something or doesn't want you to do something. How do you cope with that? Because I'm sure everybody's being very ethical in the way that they do it, but you can't possibly please everyone, can you?

[Rachel Reeves]

I've definitely come to that conclusion. Well, look, obviously how the money is spent and how we raise it are two of the biggest decisions and questions for any government, aren't they?

[Ian Dale]

I can sense a 22 billion black coal coming here.

[Rachel Reeves]

I mean, look, the reason people voted Labour at the last election is they wanted change and they were unhappy with the way that the country had been governed. They know that we inherited a mess. They know it's not easy to put it right, but people are impatient for change. I'm impatient for change as well, but I've also got the job of making sure the sums always add up and that doesn't always make you popular because you can't do everything. You can't do everything you might want to do. You certainly can't do everything straight away, all at once. And if you want to do good things, you've got to find the money to pay for it. So, you know, yesterday I was in Aberdeenshire, we were at St Fergus and, you know, I was there because we put money into carbon capture and storage. A lot of money at Merseyside Teesside in Aberdeenshire, in Hull. That is a lot of government money backed by private investment as well, and that is very welcome by the industry there. But they don't like the energy profits levy. Well, I can understand that that's extra tax that the oil and gas sector are paying, but you can't really have one without the other, and that's the sort of argument that I've got to sort of front up and say, you know, you like this, you don't like that, but actually you can't have one without the other. You can't have the better public services and the investment in infrastructure unless you're raising the. The money to do that. Yes, you can borrow more, but already 10% of what government spends is on debt interest costs. Most of that debt is owned by US hedge funds. I don't think there's anything progressive about spending more money to pay interest to American hedge funds, but those are the choices. Tax, borrow and spend. And I've got to get the balance right. I think we are getting the balance about right. But of course you're going to disappoint people. No one wants to pay more taxes. Everyone wants more money on public spending and borrowing is not a free option because you've got to pay for it. So, you know, I think people know those sort of constraints, but no one really likes them. And I'm the one, I guess, that has to sort of front it up.

[Ian Dale]

How does it work when you've got a cabinet of however many it is, 25 cabinet ministers, all of whom are wanting more money for their particular department, quite reasonably. But you've got to say no to a lot of them. You keep saying yes to Wes.

[Rachel Reeves]

Wes would like more.

[Ian Dale]

What are the factors that you've got to sort of swirl around your brain when you make the decision as to who's going to get what? I mean, does it come down to. Well, yes, they've made a very good case, so we're going to give it to them. And in terms of saying no, I mean, I'm not expecting you to name them, but there will be some Cabinet ministers who said, well, we can say no to them because they won't cause trouble. Oh, no, you say no to Angela and you know what's coming.

[Rachel Reeves]

No, it's not like that. We've just gone through the spending review process. You know, we start the process with saying, you know, did the budget last year, this is the money available. We now have to divide it up over the next three years for day to day spending, five years for capital spending between these departments. There's not any more money available than what we set out in the Budget. And the Budget obviously did involve increasing taxes, did involve borrowing a bit more as well. So the sort of envelope was set and then we had to divide it up. There were difficult conversations. Everybody put in for more money than they.

[Ian Dale]

Who's the most difficult I'm not going to say that. Going to throw me a bone.

[Rachel Reeves]

I mean, so we needed to sort of settle the NHS pretty quickly because it is by far the biggest spending department. So you have to get that settled, otherwise you have no idea what is available for the others. It's a bit more easy to spend on capital than on day to day spending because it is reasonable to borrow for capital investment that pays back over a long period of time. So those are some of the easier conversations to have. Obviously, we're putting a lot more money into defence. The world has changed, we can all see that all around us. So we're taking defence spending to 2.6% by 2027. So, you know, in a way they should be easier conversations because those are budgets that are rising quite a lot more than inflation. But overall government spending is rising a faster rate than inflation. And so everyone's getting real terms, or pretty much everyone's getting real terms increases. But there are awful lot of challenges to deal with. You know, 7.6 million on hospital waiting lists, prisons full. Yeah, lots of challenges.

[Ian Dale]

Just on defense. I mean, the figure keeps changing on defence, doesn't it? And I've never quite understood why. It has to be a percentage of gdp if you want, if you feel you need to buy some new F35 fighters, GDP figures shouldn't play a role in that. You decide whether you've got the money or not. So we've got 2.6, we're now talking about 3.3, 3.5, and then Donald Trump talks about 5%. This is changing all the time. How much are you reliant on contingencies for this kind of spending? Because in theory, as the Prime Minister says, Britain has to be on a war footing. Compare it to the 1930s, when defense spending almost overnight went like that. And by the middle of the Second World War, we were spending 40% of GDP on defence. I mean, does that give you sleepless nights, those kind of figures?

[Rachel Reeves]

Well, already we are putting something like £12 billion by the last year of the forecast extra into defence spending. So it is a huge uplift. We've published the Strategic Defence Review, which sets out the needs we have as a country. We think that what we're putting in is the right amount. Of course, it's not just us increasing our defence spending. Every country in the world, pretty much, certainly every country in Europe and in NATO is increasing their defence spending. One of the challenges, but also the opportunities is to coordinate better with other countries. So you have the sort of interoperability of equipment, because, you know, our allies, if we are fighting a war, we'll be fighting the same war. And so, you know, getting better value for money by greater coordination between countries, I think is important as well.

[Ian Dale]

If I was John Healey, the Defense Secretary, I would be wanting you to listen to a podcast called the War Game. Have you heard of this?

[Rachel Reeves]

No.

[Ian Dale]

It was done by Deborah Haynes, the security correspondent of Sky News, and they basically war gamed what would happen if there was a Russian air attack on the United Kingdom. It's the most frightening thing I think I've heard in years. And they had Ben Wallace as the Prime Minister, Jack Straw as the Foreign Secretary, Amber Rudd as the Home Secretary, and then they had various military figures and they war gamed what would happen over the next 48 hours. And I mean, the basic message was we as a country are. I shouldn't say the word that I want to say. Let's say buggered. I mean, we would not be able to respond in the way that I think most British people would think that we could. Now, okay, you can say it's a drama, it's fiction, but they were all operating with a lot of knowledge about the state of our defences. Do you not think over the years that successive governments going back to, I would say the Thatcher government have let us down as a country in our defence spending?

[Rachel Reeves]

Well, look, I think the threat has changed and increased, you know, substantially. The threat after 911 was more around terrorism, but it is now state actors that are our biggest threat. But I was at raf, loss of mouth yesterday. Our armed forces are the best in the world. They're incredibly impressive. We are putting more money into it, we are buying more equipment, but we are also working probably more closely with our allies than we have, you know, any time since the end of the Cold War.

[Ian Dale]

Yes, with all of our allies, including the United States.

[Rachel Reeves]

Yeah. I mean, we're part of Aukus with the United States. You know, we are the biggest defence spender in Europe. Work closely in terms of security partnership. There's no greater partnership than between the US and the uk, and that is incredibly important for our defence.

[Ian Dale]

Are you going to meet Donald Trump when he comes over in September, do you think?

[Rachel Reeves]

Please. I presume so. I met Macron when he was here a few weeks ago. It's a state visit. I expect the Chancellor will be involved. I work very closely with my US opposite number, Scott Besant. Talk to him, see him regularly, as you would expect.

[Ian Dale]

Any special message for Donald Trump?

[Rachel Reeves]

Well, look, we've got Our trade deal, we're very pleased about that. We do have the best trade deal of any country in the world now with the us, we've got the best trade deal with India. We've improved massively our trading relationship with the EU in the last few months in May, when we had that summit. So I think we are in a good position compared with other countries. Whenever I'm at these, like G20 and G7 meetings with other finance ministers, they all want to know how we managed to get this trade deal that no one else has managed to get. I would like other countries to get those trade deals because it reduces some of the global disruption and frictions we've got at the moment. But if you're an investor thinking where to put your investment, UK looks like a pretty good place at the moment because we have better trading relationships with all of the big trading blocs.

[Ian Dale]

Do you think that, I mean, Jonathan Reynolds has been quite open that it's because of Brexit that a lot of these things can happen and inward investment, and particularly because we have lower tariffs than America, inward investment ought to be a major thing over the next few years. Have you got a strategy to attract more inward investment into this country? Because that is what will drive growth?

[Rachel Reeves]

Yes. If you look at the sort of recent growth numbers, in the first quarter, we were the fastest growing economy in the G7. That was mainly driven by private business investment and that has been the bit of GDP that has been the weakest over the last decade or so. We've secured, I think, £120 billion of private investment into the UK since the general election last year. That is very significant. Some of the investments that things like carbon capture and storage, the supercomputer, Edinburgh University, those are big, substantial investments just here in Scotland, but they see that replicated all across the uk. Public and private money often working together, certainly for carbon capture. You, you know, that is a sort of joint venture with some of the big energy companies and the UK government to try and sort of exploit that opportunity. So we are definitely in the market for inward investment. We held a very successful summit last year where we had some of the biggest investors in the world. And one of the reasons why we're increasing public investments in projects is to try and sort of leverage in that private sector investment. We've set up GB Energy, for example, that's headquartered in Aberdeen.

[Ian Dale]

Nobody knows what that does.

[Rachel Reeves]

Well, one of the things it's done is put load of solar panels on the roofs of schools to cut their energy bills. So they can spend more on education than on extortionate energy bills. They're going to be investing in things like new nuclear in wind technology. Another announcement yesterday was, I think, the biggest offshore wind project ever, Berrick Bank. So those sorts of investments are things that, through the National Wealth Fund and GB Energy, both of which we've created as a government, we can make those big investments to boost our energy security, to get bills down to bring jobs to Britain. Yeah. And it also helps contribute to tackling the climate crisis.

[Ian Dale]

But how do you get the message across on this kind of energy policy? Because reform and to an extent, the Conservatives seem to have adopted the sort of anti net zero stance and it's proving to be quite popular in some of the polls that you see. And I've never really thought that the government has really got to grips with putting that message over to the electorate in the way that they'll need to to prevent Nigel Farage from really grabbing this as an issue.

[Rachel Reeves]

So, certainly, like energy costs, costs are one of people's biggest concerns and I totally understand why the bills have gone up massively after Russia's invasion of Ukraine. But one of the reasons we were so exposed to Russia's invasion was that we were very reliant on global markets for our basic energy needs. And so we saw prices go up more sharply in the UK than elsewhere because of a lack of investment in homegrown energy and particular particularly in renewables, which we have more control of the prices of than oil and gas, which are obviously traded on international markets. So, you know, this is, I think, first and foremost it's about energy security. So we're investing in new nuclear at Sizewell Sea down in Suffolk to ensure that we can produce our own electricity. The same with the solar and onshore and offshore. But also onshore in England was effectively banned by the previous government. We changed that in the first week of this. Government have had substantial investment into onshore wind in the. In the UK over the last year. So there are big opportunities there. I think the investment we announced in offshore wind yesterday will create something like 4,000 jobs. It's also good for jobs and bills. That investment that helps. Now, look, oil and gas is really important. It'll be important part of the energy mix in the UK for decades to come. But we also need to wean ourselves off that resource because it is dwindling in the North Sea and reliance on oil and gas leaves us very exposed to what's happening in global markets. And we've paid the price for that in the last few years. We are very fortunate in the UK because of the shallow waters in the North Sea and the Celtic Sea and also the abundance of wind, which we all know about, those opportunities that exist, and so we're trying to exploit those to get the jobs and get the security here. I do recognise what you say, though, like the Tories having legislated for net zero and now rowing back from that, you know, reform comes out with sort of all sorts of conspiracy theories and reform will be our opponent at the next election, I'm sure of that. The Conservatives, I just don't see that they're making any inroads. They haven't acknowledged the scale of the defeat last year and, you know, just feel pretty irrelevant at the moment. Whereas Nigel Farage is on the ascendancy and so we do need to take him on. And his myths, because they are myths, they're simple solutions to very complex problems. I know that people want change, but his change is a mirage and we are trying to get on and deliver.

[Ian Dale]

Do you not think, though, that there is a real problem here? Because I've always thought that if by the time of the next election, the Tories haven't got themselves together, maybe they've gone through another couple of leaders, so they're seen as an irrelevance. If Labour doesn't deliver on its main manifesto pledges on immigration, the health service growth, then there will be a sizeable chunk of the electorate who are not necessarily allied to any political party. But who would think, well, the other two have failed. Let's give old Nige a go. I may not agree with.

[Rachel Reeves]

That's exactly right. That is the risk. And so our job is to deliver on the promises that we made in our manifesto, but also to show when we're making decisions, who we're prioritising. You know, Kier talks about this, you know, having his mind's eye, you know, some of the people he met during the election campaign, and also probably his own family as well, and his background. And showing, not just delivering, but showing when we are making decisions, that we are always prioritising, you know, the ordinary working person on a modest and middle income who have been battered by the cost of living challenges the last few years, haven't found their way. Wages keeping up with inflation. When they want to see a doctor, they can't get an appointment. When they are on a hospital waiting list, they're on it for months. We need to show that things can be different and if we don't address those things, not only will we not win again. We won't deserve to win again because people voted for change and it's our job to deliver it.

[Ian Dale]

The health service, I think, is absolutely key here, but you've now got the resident doctors on strike, which has got to increase weight. It can't do anything but increase waiting lists, I would have thought. And that will. That will really dent the government's ability to say, look, you can see all the changes that we've made.

[Rachel Reeves]

Yeah. And it is very frustrating. You know, last year we did a pay settlement for the resident doctors worth 22%. We gave them another pay rise this year above the rate of inflation, better than the pay awards for most of the rest of the public sector and actually better pay awards than a lot of the private sector as well. Would we like to pay doctors, nurses, teachers, police, more? Yes, of course we would. But can we afford, as going back to the earlier conversation, to do everything that everyone wants? No, we can't. And I think the offer we've made to resident doctors is more than reasonable and I would encourage them to get back to work. And I think they are, I don't know, have now agreed they're going to get back to negotiations with Wes and the health team. But, you know, one of the reasons it's frustrating is that, you know, in the first year of this government, we have reduced NHS waiting lists by a quarter of a million. We've delivered 4 million extra appointments in the first year of the government. But, of course, if resident doctors aren't showing up for work, we're going to struggle to maintain that momentum. But you might that we want to.

[Ian Dale]

An imperfect storm survive soon because nurses have rejected their pay, paramedics have rejected theirs. I mean, are we heading for a summer of discontent in the nhs?

[Rachel Reeves]

Well, look, the nurses haven't, you know, decided on strike action. The resident doctors have agreed to get back to the negotiating table. I think that, you know, I think that most people would see that the pay increases, given the, you know, the circumstances we face, are fair and reasonable. And I think most people want to see public sector workers back at work.

[Ian Dale]

Let's go back to Nigel Farage, because are you not in danger of talking him up? I mean, you basically just said you don't really see the Tories as relevant to the political debate. Now it's all about fighting reform. But the more you talk about Nigel Farage, the more publicity that gives him. Isn't that a dangerous.

[Rachel Reeves]

I don't really buy into that. I mean, it's just a political reality, you know, we can all see the opinion polls, we can all see who's sort of, you know, driving the agenda from the opposition benches. And it is reform. And that's going to be a different political fight. Any I've ever had in, you know, my time as an mp these last 15 years, you know, I expect in my seat in Leeds Western Pudsey, that they will be my main rivals at the next election. And I think that most MPs will see, you know, reform as the biggest threat. I think it will change how people vote. I think that, you know, there's been a lot of tactical voting to stop the Tories or, you know, in some cases, to sort of stop the snp. And I think you will find in England especially, but also probably in Wales, that people who want to stop reform, reform will coalesce to get around the party who are best placed to do that. But we've seen a lot of political alignment in the last few years. The Brexit vote gave calls for some political realignment and this might have the same impact. But I'm in no doubt that reform will be our rivals and as a result, you know, we've got to take our fight to them. It used to be that, you know, PMQS was the moment that, you know, the Prime Minister and the would be Prime Minister Minister up against each other. I just don't think that PMQ serves that purpose today because I don't think Kemi Badenok is going to be the main rival for Prime Minister. They may change their leader before the next election, but I still don't think that PMQ's is going to be between the Prime Minister and the person who's the main challenger for that role, because, you know, he's sitting sort of four rows back with his merry band. But that is the place. Political threat, not the Tories.

[Ian Dale]

What about the new Jasbullah Party?

[Rachel Reeves]

I mean, yeah, well, shambles, but.

[Ian Dale]

Well, is it a shambles? They've got apparently 500,000 people signed up on their website.

[Rachel Reeves]

We were talking to Jess later. Jess got an email from your party, or whatever it's called, saying, you know, thanks for registering. She hasn't registered for your party, so you can ask her about that later. But she sent a few of us on WhatsApp, the email that she'd got. So I'm not sure who signed her up for that. But it is the most unlikely member of your party.

[Ian Dale]

I mean, even. I mean, it has had a bit of a shambolic start, but to get half a million people all right, if it's 400,000, that's still a lot.

[Rachel Reeves]

They're not joined, they haven't paid a membership.

[Ian Dale]

No, I know, but that's what they are promoting this as having more support than reform. Now, they could become the reform of the left, couldn't they? So they could do to you.

[Rachel Reeves]

Jeremy Corbyn had two chances to be Prime Minister and I think the country gave their verdict most recently in 2019, where labor had its worst result since 1935. If he wants to give it another go, you know, be my guest. I think the voters will have the same reaction.

[Ian Dale]

Isn't that being really complacent?

[Rachel Reeves]

It's not being complacent. He tried to destroy my party. He can now go and set up his own party. The country has rejected him twice. The bloke's got a big ego. He can have another go, but I think the country will give the same verdict.

[Ian Dale]

Okay, membership forms are available on the way out. Let's turn it from the political to the personal. How do you get on a personal basis with Nigel Farage? I mean, do you. Do you have little chats?

[Rachel Reeves]

I've never. I just haven't ever met him.

[Ian Dale]

Really.

[Rachel Reeves]

Yeah.

[Ian Dale]

Why not?

[Rachel Reeves]

Well, I just. We haven't had that interaction because a lot of. I get on well with MPs from different numbers, but he's not my opposite number.

[Ian Dale]

I know, but he's the leader of a political party.

[Rachel Reeves]

Yeah, I just haven't. I mean, you know, we've both been MPs for the last year, but no, he's not somebody that I've ever, you know, come across or, you know, met at an event or whatever. I do have good relations with a number of Conservative MPs and former Conservative MPs with Liberal Democrats. But no, I don't have a relationship with Nigel Farage. Kemi, I don't really know her. I get on well with Mel Stride, who's my opposite number. Get on well with Jeremy Hunt, who you're going to have here on Monday. Jeremy has been into number 11 a couple of times since I became Chancellor and had a cup of tea with me and, you know, given good advice and I actually get on well with him. I get on all right with Rishi Sunak, obviously, also a former Chancellor as well as Prime Minister. Have a good relationship with Theresa May. So I do get on well with a number of Conservatives and I think that is, you know, also remember during those Corbyn years, I wasn't a front bench politician. I sort of took A sort of step back. And I did quite a lot of cross party work during that period. I chaired a select committee which had, you know, more Conservatives on it than it did Labour because it reflected the political makeup of the House of Commons, so built good relations. Then I co chaired the Jo Cox Commission on Loneliness with a Conservative mp. So, you know, I think I'm pretty good at sort of some of that cross party working. I'm actually, I think, less tribal now than when I first became an mp, which might feel a bit weird, but. Yeah. Nigel Farage. It's not that I draw the line. I can't imagine we've got a huge amount in common, but we just haven't come across each other.

[Ian Dale]

Let's talk about that Prime Minister's questions a little bit where you were visibly upset. Can you sort of. I'm not going to pry into areas that I shouldn't, but can you just take us through what happened? I mean, people said, well, she has an argument with the speaker. That was sort of what prompted it. Take us through in your own words, what happened.

[Rachel Reeves]

So, you know, Prime Minister's Questions, 12:00 a Wednesday. The place that I have to be is sitting next to the Prime Minister. I'd done a visit in the morning, I got to the House of Commons. Yeah, there was stuff going on and, yeah, I was having a difficult day. I think probably most people that will resonate with them, they've had difficult days at work. I guess the only difference is that I had a difficult day at work and the cameras were in front of me and, you know, I regret that that happened, but I think most people have had days at work when they've felt upset and cried, but luckily they don't have the TV cameras on them.

[Ian Dale]

And what did you make of the reaction? I was watching it live and I remember when Kemi Badenot, she said something along the lines of, the Chancellor's looking very miserable. Do you think she went over the top by saying that or do you think, well, that's actually part of her job to.

[Rachel Reeves]

Well, it was a statement of the facts, wasn't it?

[Ian Dale]

Well, it kind of was, I suppose.

[Rachel Reeves]

I mean, understated, some might say, but.

[Ian Dale]

Apparently I'm told that some of the Conservative whips had said to their Labour opposite numbers, look, you do realize we can see that Rachel's sort of a bit upset and they didn't sort of. I don't know how they would have intervened, but a lot of people thought, well, why were you even in the Chamber if You were that upset?

[Rachel Reeves]

Well, I wasn't when I was, yeah, I thought I was okay, obviously I wasn't. I wouldn't have gone in if I thought that I was going to be visibly upset. But I felt it was my duty to be in Prime Minister's questions, where I always am on a Wednesday at 12 o' clock sitting next to the Prime Minister.

[Ian Dale]

And what did you make of the subsequent. I mean it was just wall to wall, wasn't it, the coverage of it. Did you find that upsetting? Did you find it embarrassing?

[Rachel Reeves]

In my office in number 11 they lay out the newspapers every day. That was one day since I become Chancellor, they didn't lay out the newspapers for which I'm very grateful. But look, you know, the next day I got back on my feet. I was on a visit with the Prime Minister and with West Treating. We were making an announcement about NHS investment. We went to a health centre down in East London and yeah, I just got back up and carried on because that's what you have to do in this job and you know, that happened. Not going to make a habit of it but I guess I am in the end only human indeed.

[Ian Dale]

Let's finish off this part before we go to questions by talking about the younger generation because you will know whenever you go into a school people always ask, well, what can be done to engage younger people in politics? Why should we have any hope? Because we'll never have any hope of buying a house. There was a poll out this week, I did a phone in on it which proved to be quite depressing in a way that 2/3 of 18 to, I think it's 24 year olds are thinking of quitting Britain? And I was really shocked by this. Do you feel that there is now a real tendency for people to talk the country down in a way that leads them to be convinced that there is no hope for them if they stay in this country and so therefore they look at opportunities elsewhere and if you look at the figures, there are quite a lot of people, not just millionaires, but quite a lot of people thinking, well, the grass is greener on the other side. It isn't always greener on the other side, but they seem to think it is at the moment. Isn't that something that should be concerning all politicians?

[Rachel Reeves]

So one of my favourite things about my job is when I go to schools in my constituency. I love it. I love talking to, you know, kids at primary school and secondary school and one of the nicest things I've been able to do as Chancellor is invite school kids to number 11. I had my old primary school and secondary school into number 11 recently and it was, was one of the best things ever. Apart from when Keir Starmer photobombed a photo with me and my girls from my secondary school. They were all like, oh my God. Oh my God. I was like, it's like me age.

[Ian Dale]

17.

[Rachel Reeves]

But it was absolutely wonderful because those kids would never have had a chance. I never had a chance to, you know, to be a politician, let alone a Prime Minister and Chancellor when I was at school. So those things are just brilliant but also they're a reminder why you're in the job as well. Because you're absolutely right. I can understand why 18 to 24 year olds think I'll never get the housing ladder. I won't have the same opportunities that my mum and dad had because home ownership is declining in our country today. You know, the cost of a house here in Edinburgh, in London, but also my own constituency in Leeds, you know, compared to what people earn, it's just too expensive. But we have made, Angela has made the commitment. One and a half million homes in this parliament and a good chunk of them are going to be social and affordable homes. We've put up the stamp duty on people buying second homes because as we build those homes we want ordinary people, young people to be able to get them. No, I wasn't, I was very stuck. I remember when I had my first child and we went to those NCT classes where you meet other parents and more than half were renting. And I think about my parents generation and my parents grew up in the same area that I was living in at that time. You know, all of their friends would have owned their own homes. My mum and my dad were both primary school teachers. My mum had me when she was 24, my dad just a few years older and they owned a three bedroom house in south London. There is absolutely no way that two primary school teachers without a lot of help from parents would be able to buy a home in South East London today. I know that the Edinburgh housing market is probably just as mad as the London one, so I understand why people feel that. But we're not pacifist politicians. We can do some about it. We've put a lot of money in to apprenticeships to further education into house building because we want young people to get the same opportunities. I'm also often struck when I talk to young people and I was at earlier in the week when I was meeting some apprentices, it was down in Cornwall. And I sort of asked them about how they got on the apprenticeship program and they were talking about their experience with the COVID years. And I think we can't underestimate the impact that that had, particularly on young people. You know, for you and me, it was just two years of our lives, but it's a small proportion of our lives. But for a young person, for my kids, or for somebody, you know, in their early 20s, their most formative years were spent in the house with two or three other people and they did their lessons, if they were lucky, on Zoom, if not, they were just at home with their books. We got a nice house, my family, but we were cooped up. My kids were early primary school at the time, we weren't teachers, we weren't able to provide the learning that they should have got. And then young people at university, it was a nightmare for them. And so I absolutely. I absolutely understand why a lot of young people feel that things are just not working for them today. And they've had a pretty raw deal these last few years. And politicians blaming young people, you know, for things and saying, you know, one in eight young people are not in education, employment or training. Whose fault is that? Is that the fault of those young people or is it the fault of the opportunities in this country? And we have let people down. We need to put more money and more investment into mental health so that people get the support they need. But we're doing those things. We are going to turn it round. But I'm not surprised by those things that you say. And I think that our young people, more than anyone in our country, have had a really, really tough last few years.

[Ian Dale]

Who has been the standout cabinet minister in the first year of the Labour government? Present company accepted, obviously. But I was talking about this to someone the other day and we both agreed two names. I wonder if they would be the same to the us.

[Rachel Reeves]

Who? Yours?

[Ian Dale]

No.

[Rachel Reeves]

You start and you're going to then say no.

[Ian Dale]

I will tell you who I think are.

[Rachel Reeves]

I think Steve Reid, Environment is brilliant. He is sort of an unsung hero. But to do things like build homes, we've got to change the environmental regulation, we've got to change the planning system so we can actually get those homes built. We've got to build reservoirs in our country again if we're going to build more housing. And he's doing all of those things. So I think he's excellent. It's partly because I just love the brief. I think that Bridget is excellent. I think Bridget Phillipson, Education Secretary, speaks with huge passion. You know, we've just introduced in England, but Barnet consequentials for Scotland. Free school meals for 500,000 more young people. It will lift 100,000 children out of poverty because it's for kids whose parents are on universal credit. And that is really personal, said Bridget, because Bridget, when she grew up in Sunderland, was on free school meals and Mum was a single mum. She didn't have it easy. She talks about kids not wanting to hang out with her or their parents not wanting their kids to hang out with her because she lived in a rough area and was poor and things like free school meals. That is a real burden, boost to family incomes and it gets rid of some of that stigma as well. I talked to teachers and head teachers about kids who can't afford school meals, but they're not, at the moment eligible for them and they come into school with these packed lunches and there's nothing there. And so things like that that Bridget has really champions. Yeah. I'm passionate about. Who are yours, then?

[Ian Dale]

Mine are Angela Rayner.

[Rachel Reeves]

Yep.

[Ian Dale]

I don't agree with everything she does, obviously, but I think. I think she has shown how to grip a government department and turn it to her policy agenda, which I don't think every cabinet minister has done. So I pick her and I would pick Wes because I think he's a politician that talks a good game, but actually also has gripped his department in a way and done quite radical. I mean, abolishing NHS England.

[Rachel Reeves]

Yep.

[Ian Dale]

I mean, if a Conservative had done that, can you imagine the held to pay that there would have been? It's gone off without a murmur almost. So those are the two I would pick. And just finally, before we do go to questions, the relationship between the Prime Minister and the Chancellor is always crucial in whatever government. Was that something that you, right from day one, thought, right, we've got to be on the same page. Have you ever had a discussion with Keir Starmer about that?

[Rachel Reeves]

Well, I guess so. We know that it's a partnership and it's a partnership that has to work. We, when we're, you know, in Westminster, we see each other every day. We text. He doesn't use WhatsApp, he only texts. So we text each other. I know. And, yeah, we see each other all the time and our lives are now very closely intertwined because we both live above the shop.

[Ian Dale]

Yeah.

[Rachel Reeves]

So, you know, we've both got, you know, kids and so.

[Ian Dale]

But do you live above number 10?

[Rachel Reeves]

Yes.

[Ian Dale]

So you've got the smaller Flat, I mean it's.

[Rachel Reeves]

I wouldn't say it was a small flat. I mean it's very nice. So. So he lives above number 11 and that's something.

[Ian Dale]

When Tony Blair has he changed Boris's wallpaper?

[Rachel Reeves]

I think it all fell down. Yeah. Rishi sun acted up my flat so it's very nice.

[Ian Dale]

Talking of Rishi Sunak, first question from Helen. Any update on a wealth tax?

[Rachel Reeves]

We did do the private jet tax last year, which is one of my favourites. I think there's about four countries in the world that have got a wealth tax. One of them is Switzerland. Switzerland doesn't have any inheritance tax. We have inheritance tax, we have capital gains. We've just got rid of the non dom tax status that doesn't exist anymore in our tax system. So we do have taxes that tax the wealthy. I'm not keen to do what Switzerland has done and replace those with a wealth tax because I think you risk actually losing money by doing those things. And countries like Spain that have a wealth tax have got so many exemptions it hardly brings any money in. So, you know, I'm not against, you know, asking the wealthiest to pay their fair share of tax. In the budget last year we raised £40 billion of tax and it was all on business and wealthy people. So I don't think you can say that this government haven't got more money off of the wealthiest. But I think there are sort of limits of what you could do. I think a pure wealth tax, I don't think that would be the right approach.

[Ian Dale]

But it's so deceptively attractive, isn't it?

[Rachel Reeves]

Because everyone wants to raise more money.

[Ian Dale]

If I've got somebody, say from the Corbyn wing of the Labour movement on my show or somebody from the Greens and they say 2% on anyone who's got more than 10 million, I mean, to an ordinary working person that sounds eminently sensible, doesn't it?

[Rachel Reeves]

But there were already big taxes on that group of people. And I'd just say that countries that have done this have usually replaced other taxes which target the wealthy, obviously will make decisions in the round time of a budget. But I do think people who sort of, you know, come up with simple solutions, you know, do need to explain exactly how it would work, whether it's a one off, whether it's an ongoing tax, what it would do around tax avoidance, what it would do about people, you know, moving or changing the way that their wealth is with is stored. But you know, look, last year the people who complained about the budget were the wealthiest and some of the businesses who were affected by the increase in national insurance. But I made a choice then. I made a choice that despite the fact that I needed to raise £40 billion in tax, I believed I did not increase the main taxes that working people pay. I froze fuel duty because that's a big component of the costs of ordinary people. And I put all of those tax increases on the wealthiest and on business because I thought that was the right approach.

[Ian Dale]

Is there any aspect of that that you now regret? I mean, you've been in office for a year. There must be something that you think, had I got my time again, I wouldn't have done that.

[Rachel Reeves]

Well, I mean, yeah, I probably wouldn't have gone into Prime Minister's questions that Wednesday.

[Ian Dale]

I was hoping you're going to say.

[Rachel Reeves]

The national insurance increase, it raised £25 billion. We put £29 billion into the NHS at the spending review. We've increased the number of appointments by 4 million a year. I recognise that increasing national insurance contributions, you know, has an impact. I'm not naive. But what would the counterfactual have been? The counterfactual would be, we haven't got the money to put into the health service. The public finances would remain in a mess. As a result of stabilising the public finances, we've had four cuts in interest rates in the last year. Two more are priced in for the rest of this year. If you are a tracker mortgage with an average sized mortgage, those four cuts so far have taken £650 off of your annual mortgage bills. That is a far cry from what we've had in the last few years when rates have gone up and I.

[Ian Dale]

Don'T, I do get all of that, but if you go through an election campaign trumpeting, I mean, effectively your equivalent of education, education, education, with growth, growth, growth, and then you introduce measures like that, which, I mean, I don't have to be an expert economist to see that that is an anti growth measure. It's cost jobs, unemployment is going up. It means that smaller firms as well aren't investing in the way that they would have done because they've got these extra costs to bear. I mean, there are a lot of negative consequences from it.

[Rachel Reeves]

And I've said that, I recognize is that recognise that every policy has a consequence. But if we had not have increased that tax, we would not have had the cuts in interest rates, I don't believe. Because the number one thing that is needed is to have stability in the economy, to be able to bring down interest Rates and the borrowing costs, both for families with mortgages or with rent. And indeed, businesses who are also affected by interest rate decisions would have found those interest rates would have been higher than they otherwise would have been. And anyone who's been one of the 4 million beneficiaries of an extra appointment in the NHS have been a beneficiary of the revenues we've managed to bring in through the increase in national insurance. So a Chancellor doesn't get to choose their inheritance. Chancellor, though, does get to make the decisions about how to respond to that inheritance. I made the decision, I believe it is the right one, not to put up taxes on ordinary working people who have already been clobbered the last few years, but instead ask businesses and the wealthiest in our country to pay a bit more. And I stand by those decisions. And everything that I did in the spending review, whether it is the infrastructure investment, the money for free school meals, the money for the breakfast clubs, the, the money for the health service, the money for the one and a half million homes that's only possible because of the decisions we made. And so if you support the extra money that we're putting into our public services and into rebuilding our country, then you have to support tax rises to pay for them. And if you don't support my tax rises and the ones chosen by this government, you have to put forward an alternative and that is your prerogative. But you know, you can't have one thing without the other.

[Ian Dale]

I'm getting an echo of Norman Lamont here. Je ne regrette rien.

[Rachel Reeves]

Well, look, we faced the challenges that we faced. It's not been an easy year. We have had to put up taxes. But I honestly believe that in the circumstances we faced, those were the right decisions to put our public finances on a firm footing. And our public finances were in an utter mess when I became Chancellor. And the number one thing I promised during the election campaign was to return economic stability to our economy in terms of growth and jobs. With the fastest growing economy in the G7 in the first quarter of this year, we have attracted 120 billion pounds of inward investment into the.

[Ian Dale]

You're going to repeat mode now.

[Rachel Reeves]

Well, but those things are only possible because of that stability. We've returned to the economy and for businesses. The planning reform, the three trade deals, the reductions in regulation, the pensions reform to unlock long term capital for businesses to grow and invest, those are all the positive things that we've done to support business. I recognise that the national insurance contribution increases for businesses are not popular with those businesses. But in the circumstances that we faced and with the need to put more money into our public services and to make sure our public finances added up again, it was the right thing to do.

[Ian Dale]

And you made a big point in the election, saying, look, we are facing a huge crisis here. When you compare it to the IMF crisis of 1976 or Black Wednesday 1992, what Alistair Darling faced in 2000, is it on those levels?

[Rachel Reeves]

I think what we faced was, you know, we inherited a situation where taxes were at the highest level for 60 years, and yet at the same time, nobody thinks that there's enough money in our public services. And the NHS particularly was on its knees. And we also have very high levels of debt. Debt in our economy. Government debt is the same size as our total economy, everything we produce in a year. And so there are no easy answers. You know, when Tony Blair and Gordon Brown got in in 1997, public services were in a mess, but the economy was growing and debt was a lot lower than it is today. So there were no easy levers to pull when we came into office. I don't believe the borrowing was more and more is an option. The tax increases, well, we've made them, but there is a limit. The tax burden is now at its highest level for over 60 years.

[Ian Dale]

And there's a question here related to that, says there's no name on it. We all had such high hopes. We still do, but. There's always a but, isn't there? Why do you keep scoring so many own goals? The Tories left a message face into it. An increased tax. Don't punish us with national insurance hikes.

[Rachel Reeves]

But national insurance hike is a tax increase. We increased taxes by 40 billion pounds last year. It was the biggest tax raising budget ever. So we have increased taxes substantially and we put that money into public services. It is things in the health service, the waiting lists have reduced, but there are. We got the waiting list down from 7.6 million to something like 7.3 million. So if you're one of the 250,000 people who have come off a waiting list, that's great, but there's still 7.3 million people on them and it will take time to turn that around.

[Ian Dale]

There will still be 5 million people at the time of the next election.

[Rachel Reeves]

Which is why we've put £29 billion extra a year into the NHS to make a more significant dent.

[Ian Dale]

But that's wages, hasn't it? It hasn't gone into any reforms. There was no. There was no sort of crispr you.

[Rachel Reeves]

Mentioned we got rid of NHS England. That is a pretty massive reform. That's taking money out of the back office bureaucracy and putting it into the front line. Yes. We have given pay rises to people that worked in the nhs. Is that enough for everybody? No, obviously it's not because the resident doctor have taken that. I guess in the end, my job is to try and get the balance right and you're never going to be able to please everybody in this job. You know, pleasing anybody sometimes would be great, but you can see the dilemma that I face. People say you should increase taxes more. All right, fine. But it did increase them by 40 billion and a lot of people didn't like it. Our public services are in a mess. We need to reform them. Absolutely. You know, we need to improve, improve the digital infrastructure in our government to deliver our services better. We need to reform them. So we're spending more on the front lines.

[Ian Dale]

I sense a real frustration. So why can't the people see what we're doing? We know we're doing the right thing.

[Rachel Reeves]

I think people can see that we're trying to turn things around, but people are impatient and I totally get that.

[Ian Dale]

What do you do to let off steam? I mean, Gordon Brown would famously throw a mobile phone. What do you do?

[Rachel Reeves]

I try and go for a run. So I went for a run this morning. That is very good for me. But I've also got two young kids, so, you know, I can't.

[Ian Dale]

How do you balance that? Because, I mean, you're here on a Saturday lunchtime and we're very grateful to you for being here, but there must be times when you think to yourself, you know what, I should but be spending more. I mean, sorry, this sounds terrible in a way, but I should be spending more time with the kids. But you've got the second most important job in government. Can you really fit everything in?

[Rachel Reeves]

Right. Well, first of all, you would never have said that to Rishi Sunak or Jeremy Harness.

[Ian Dale]

You're right. You are right. You are right. And that's why I sort of hesitated asking the question. You wouldn't be human if you didn't think that.

[Rachel Reeves]

Of course. Yeah. I mean, yeah, right. Where would my kids rather I was today? Of course they'd rather that I was with them. But I think they're also proud of what their mum does. And when I grew up, you know, my mum was a teacher and I was incredibly proud of her. And when my parents got divorced, she became a full time teacher because we needed more money and I was really proud of, of that. And she was a big role model to me as well. So, you know, like, yes, of course. I'm not saying it's really easy, you know, like, you know, having it all. It's not like that. You know, I am a mum and that presents its challenges. How old are they? They're 12 and 10. But I genuinely believe that they're proud of what I'm doing. But I'm also in this job not just for my children, but for children from ordinary backgrounds. And I recognise that my children now got privileges that most kids do not have. And I want more children to have opportunities. I said it in my first speech as Chancellor that if when I finish being Chancellor, that more children from ordinary backgrounds have opportunities that they didn't have before, then I'll know that my job has been a success. And that is. That's my entity politics. I said that at the beginning.

[Ian Dale]

I'm just reminding something that you said to me last time I interviewed you in your office in 11 Downing Street. We were chatting after. It was all. When you'd have that sort of slight thing about the tickets for Sabrina Carpenter, who, I must admit, I'd never heard of.

[Rachel Reeves]

I can sing all of her songs and it's not because I'm a fan.

[Ian Dale]

And I said to you, I said, have you seen some of the lyrics that are in her songs? And you were just walking out the door, you sort of threw your head back. He said, I know, I'm such a terrible mother.

[Rachel Reeves]

There was one point in the concert and it said on the screen, this song contains explicit lyrics. I was like, what's a bit late now? But I mean, I remember being in the car with my dad when we were little and putting, you know, a tape on or whatever in the car and then like, you know, like, oh, she won't listen to this song. I don't like this song. It's because me and Ellie are like, oh, no, why are we so embarrassing with these lyrics? So I think it's probably always been the case that 12 year old girls listen to songs that their parents might not approve of.

[Ian Dale]

Right. Claire says, Rachel, one year in power. What has surprised you most about being Chancellor of the Exchequer?

[Rachel Reeves]

I think that personal scrutiny is something that even when I was Shadow Chancellor and Having been an MP for 14 years before I got into government, it's that stuff which I find hard, to be honest. You know, like when I read, like criticisms of the tax increases or the welfare stuff or whatever, it's sort of. It's politics. And I know that people are going to disagree. I don't want to sound like sort of obviously, like I read it and I, you know, respond to it and stuff, but it doesn't really get to me because it's politics. I don't like is the sort of. The personal criticisms. And I think sometimes slightly invasive personal scrutiny, I find that harder. I sort of, you know, getting used to it, I guess, but that's what I would say.

[Ian Dale]

Talking of invasive personal scrutiny, this is not my question. Who has the best hair in the Labour Party?

[Rachel Reeves]

Yeah, that's probably Ange, I guess. So do you know the. So do you know the story about my changing hair colour last year? You maybe passed you by?

[Ian Dale]

No, I did notice.

[Rachel Reeves]

So it was last October, so I've been Chancellor for whatever, three months and.

[Ian Dale]

Grey was starting to appear.

[Rachel Reeves]

That was a long time ago. So a friend of mine said, oh, you can get this treatment that makes your hair go, like, sort of softer, so you don't spend so much time blow drying. I thought, oh, that sounds like a good idea. So this woman came around to do my hair and as it was going on, I think it's sort of changing colour. And it sort of went like. It was. It was dark at the time, which is my natural colour. And then it sort of went orange. And at the end I said, oh, it seems to sort of change colour a bit. Will it change back? And she said, what do you mean? I said, well, because it was like dark at the beginning. And she said, yeah, it does look a bit different. She goes, I haven't seen that happen before. And she said, well, it will change colour if you get it dyed. I was like, oh, my God. Then my kids came home from school and my son said to me, said, at school we're taught two things. We are told that we should always be kind, but that we should always be honest. So he said, so if I'm being kind, you look beautiful, Mummy. And if I'm being honest, what on earth have you done to your hair? I don't know. And then I took a photograph of myself and I sent it to my political team and they were like, oh, my God, what has happened? And they're like, right, okay, we can book you in. We'll book you in for later in the week to get it done. And then the next day, and this is sort of like, again, it was early on in my time as Chancellor and I had sort of forgotten about what happens when you walk. I go out the back of number 11, not the front So I went out the back and walked to the treasury and there were all these cameras outside the Treasury. I don't know whether my hairdresser had tipped them off. And so these photos then were taken and then the next minute's on social media, media. And it was just ahead of the budget. So people were like, what does Rachel's new hair color tell us about the budget?

[Ian Dale]

I'm sorry about that one.

[Rachel Reeves]

So my office was like, all right, now you can't just go and get your hair dyed back to your old color because then that would be like, oh, what does that say about. So we sort of gradually, it sort of like went back to my original.

[Ian Dale]

Color and have you used that particular hairdresser again?

[Rachel Reeves]

We haven't seen her again. And then I went into my hairdresser because I usually go to this hairdresser that I've been to for years in Leeds. And I went in there for this sort of like. And now we're going back. And so I walked in my hairdresser and the other staff in the, in the salon came over and they went, what has been going on? I'm like, I'm so sorry. They're like, thank you. Right, so sit down and we'll get you back on track.

[Ian Dale]

Well, whoever asked that question, well done because.

[Rachel Reeves]

Not a problem, you. I think he deserves that after some of his questions.

[Ian Dale]

I think I've been quite right in my questions, to be honest. I mean, I'll tell you what, some of these, they're all about debt and I thought I'd steer away from those. Anyway, unbelievably, we've gone three minutes over time to finish, so let me thank you very much. I've really enjoyed it. Hope you've all really enjoyed it. Please say thank you to Rachel Reeves.

You've been listening to the Ian Dale All Talk Podcast, a global player original podcast. If you've enjoyed it, you might like to listen to for the Many, which is my weekly podcast with former Home Secretary Jackie Smith, available every weekend. An hour more of political analysis, a few laughs and a bit of gossip. I also have a new 15 part podcast series called the Irish Taoiseach, which covers the life and political careers of all of the 15 men who've served in the office of Taoiseach of the Republic of Ireland. And if you like that, you'll definitely enjoy my Presidents and Prime Ministers podcast, which covers 55 British prime ministers and 45 US presidents. And of course, you can listen back to all my radio shows on the Ian Dale whole show. Podcast four days a week and finally cross question every Monday, Tuesday or Wednesday. I think that's enough Ian Dale podcast, don't you? They're all available on Global Player, but most important of all, do join me for my evening radio show on LBC 7 to 10 Monday to Thursday. It'll be great to have you on board. And please do give our podcast five stars and and a review on your podcast app. Word of Mouth is the most powerful marketing tool for my podcasts, especially yours.