On Monday 13th April, Mumsnet Founder Justine Roberts sat down with Rachel Reeves to ask her Mumsnet users' questions.
Users were invited to submit their questions online ahead of the interview, and a selection of questions on the most popular topics were put to the Chancellor.
Please credit Mumsnet when using.
TRANSCRIPT (check against delivery)
Justine Roberts: So Chancellor, thank you so much for your time. We've had hundreds and hundreds of questions come in for you. And you've done it before, so you're an old hand, so we'll just crack on if that's okay.
Rachel Reeves: Yeah. It's really nice to see you Justine.
Justine Roberts: So Mumsnet user Senua says, before the election, you told us that you were going to restore hope, rebuild our country, and number one on the list of your missions was to kickstart economic growth. Could you tell us when any of this might happen because 40% of the way through your mandate, I can only see things going backwards.
Rachel Reeves: Well, I'm sorry if anyone feels like that. Our country has been through a number of very difficult years and we are starting, we are putting in place the policies to start to turn that around and we've got the right plan, the right economic plan. If you look at last year, we were the fastest growing European country in the G7, wages having increased by more than inflation in every month since I became Chancellor. And as of the beginning of this month, because of the changes that we've made to the two child limit within Universal Credit, 450,000 fewer children will be in poverty than they were before. And you know, I got involved in politics in the first place when I was at school because I didn't feel that kids from all types of backgrounds have the same opportunities to get on in life. And this will be the biggest reduction of child poverty in any parliament ever. And it does matter to me that people from less advantaged backgrounds get a really good start in life. And so I hope for their mums and dads and carers this month when they get a little bit of extra money, that will make a difference and put some hope back in their lives. Because I strongly believe it's very difficult to be aspirational for yourself and your family if all your time is spent thinking, how am I gonna be able to pay the rent? How am I gonna be able to pay the bills? How am I gonna be able to put food on the table? How am I gonna get through the holidays? My kids went back to school today after two weeks of Easter holidays. It's been lovely to spend time with them, but I know for a lot of parents that holidays are the hardest time, because they can't afford the childcare, they're not getting free school meals. And again, the changes that we’ve made to the two child limit will give I think a bit more hope to a lot more families.
Justine Roberts: Ok so I think what's coming out on Mumsnet is a theme that the middle are feeling very squeezed. So this question reflects that. Nearlylovemyusername says you've been in power for nearly two years. Can you please list the groups of people who are feeling better off now, aside from benefits claimants and unions?
Rachel Reeves: Well, if you are represented by a trade union as a teacher, or a teaching assistant, or a nurse, or you work in the armed forces or the police, you would've had a real terms pay rise for two years in a row. And I think that's a good thing because I think we should - I mean what did the pandemic teach us? It taught us about the importance of those key public service workers who keep our society going in the toughest of times. And yes, there was a trade union ask that we rewarded and paid public sector workers properly. It's one I fully subscribed to. My mum and dad were primary school teachers. They were members of their teaching trade union. And I do think that people who work in public services should be paid properly. Also, in terms of this distinction between who's on benefits and who's not on benefits - well, most parents get child benefit. That's a benefit. But I [don’t] think many of those people regard themselves as benefit recipients. My mum and dad get the state pension, they wouldn't regard themselves as being on benefits. They'd paid into the system and now they're getting something back. More than half of people who are benefiting from the two child change were not on Universal Credit when they had their first child, but things happen in our lives. A partner dies, a partner leaves, you lose your job, somebody else in your family falls ill and you have to take on caring responsibilities. And the whole point of the welfare state is it's there when you need it. We all pay in when we work as we should. But then when something happens in our lives - you are old, you are ill, you have children - the welfare state is there for you and that is a principle that I believe in. And I think this sort of "people on benefits and people not on benefits" — it's just not as simple as that.
Justine Roberts: Okay, well on that note, ProudAmberTurtle says the benefits bill is now bigger than income tax receipts for the first time in history. Should we be worried about this and if so what are you going to do to reverse it?
Rachel Reeves: Well, the key thing is making sure that everyone who can work is in work. We inherited a situation when around a million young people are not in education, employment, or training. So it's not just that they weren't working, they weren't really doing anything to contribute to society. And we know that if you experience bouts of unemployment early on in what should be your working life, you are much more likely all through your life to earn less, to be unemployed in the future, and to suffer from greater mental and physical health problems. And so we've introduced a jobs guarantee for young people. So if you're out of work for 18 months, you'd be guaranteed a job or a training place. But within those 18 months, there'll also be much more intensive support to help those young people to progress into work. And we put more money into further education and into apprenticeships for young people so that more young people could have those opportunities. I'm an MP in Leeds and at the moment in Leeds, there are more people applying to go to FE College than there are FE college places. And that is not right — that a young person who is ambitious, who wants to go and do a course to better themselves and to get ahead and to get a job, isn't able to do that because there's not the places available. That's the situation we inherited, we’re turning that around. But I believe that the best way to reduce the benefits bill is to make sure that everyone who can work does work. Also, we've increased for two years in a row now the National Living Wage and the National Minimum Wage. That's obviously a good thing in putting more money in the pockets of low income people, but it also means that the state has to pick up less of the pieces — because I believe if you go out to work, you should be able to support yourself and your family. But the truth is, because rents are so high and because of all the cost of living challenges, a lot of people who work full time still have to have support with their rent, with their childcare costs, et cetera. And so I think it is important that as well we ensure that people who go out to work can afford to live a decent life.
Justine Roberts: Okay, so that leads us on to there were a lot of questions around the labour market and particularly youth unemployment. Notmycircus says I work in recruitment so see the employment landscape in grave detail. Why have you disincentivised employing people through the Workers' Rights Act, increased employers' National Insurance contributions and increased net minimum wage. Do you have any idea of the mess you've created?
Rachel Reeves: Well, I'll go back to what I said before about the national living wage and national minimum wage. I believe that if you go out to work, you should be able to live a decent life. And also, you shouldn't have to rely on the state to prop up your wages to the extent that we do today — one in five people who go out to work are not paid a wage that they can afford to live on. And so come back to the point earlier around why is our benefits bill so high? Well, part of the reason it's so high is there are lots of people in work who need support from the state just to get by. Not to live extravagant lives, just to get by.
Justine Roberts: Are you worried about young people getting on the jobs ladder?
Rachel Reeves: I'm particularly worried about the number of young people who are not in education, employment, or training. And one way to address that is to make sure that the courses are available. Apprenticeships have fallen consistently for several years now, we're increasing them again. And we're also skewing apprenticeship places towards young people. Because they’d sort of in some businesses become a way of just training your existing workforce. Now I want employers to train their existing workforce, but that's not really what the apprenticeship levy was supposed to be paying for. It was supposed to be supporting what we would think of as apprentices. I met some fantastic young people today on the Rolls-Royce apprenticeship programme to build small modular reactors and nuclear energy projects. These were young people who had great A levels at school but had chosen to go and do an apprenticeship. And I want more young people — whether they leave school with GCSEs or A Levels — to have an alternative to university if that's what they want. And for these young people, who wanted to get stuck in and get to work and also make sure they were getting training, the reforms we’re making makes it more easy for those young people to get those changes. But look, I recognise that every policy has a consequence, and there can be good and bad consequences. There were almost 8 million people on hospital waiting lists when I became chancellor, and we had to make sure that we had funding to bring NHS waiting lists down. We increased national insurance on businesses — although if you are employing someone under the age of 21, you don't pay employers' national insurance and if you’re one of the smallest businesses you don’t pay any national insurance whatsoever. But all that money goes into funding our health service, and that's why we've had record falls in the number of people on NHS waiting lists this last year and a half.
Justine Roberts: Okay, so we've had quite a lot of questions around the tax system which is obviously your specialist subject. Here's a typical one. MidnightPatrol said: I have a one and four year old in nursery. As I earn over £100,000, I lose £25,000 in childcare support for them. I need to earn an extra £55,000 over that £100,000 cutoff to cover that loss. Where I live in London every other parent I know is either working part-time or salary sacrificing tens of thousands into their pensions to try and avoid this. Is there any suggestion that this absurd cliff edge might be changed?
Rachel Reeves: So again, this is not a cliff edge that I introduced, but is one that I inherited and I do understand what is being said there about if you've particularly got young children that you miss out on some of these key supports. Now obviously, the childcare offer is quite a new offer and it's the first time that it's been properly funded. We've put the funding into it. It is much more popular than anyone anticipated. It's actually costing taxpayers more than we originally thought. But that's a good thing because it is helping more people into work. I think it is right that it isn't available to the highest earners. If you are earning more than £100,000, you are within the top 5% of earners in the country. And I don't think you could have a system where everybody has all of their childcare costs paid because that would require even higher taxes on people to be able to afford that.
Justine Roberts: But do you acknowledge the cliff edge?
Rachel Reeves: I absolutely recognise the cliff edge and we are looking at how we can always ensure that the tax system incentivises people to work. But I think most people recognise, especially if you are in your thirties and forties and at sort of maximum earning power, that although you may lose some benefits in the short run by taking that promotion or taking those extra hours, actually you are going to progress whereby you are no longer losing out because you are earning so much more. And you know, we should celebrate people doing well and being in those very top income brackets. But I think it is right that if you are earning so much more than the national average, you should pay a bit more tax.
Justine Roberts: Okay, so on that principle as it were, and going to pensions, Skyscrapersinging says: why is the state pension not means tested in this country? In almost every other developed nation, retirement benefits are means tested, which means that a more generous pension can be paid to those who actually need it.
Rachel Reeves: We do have that because there is the basic state pension or the new state pension, and that went up by up to £575 a year from the beginning of this month. But then there is also pension credit. And pension credit is means tested and the amount you get depends on what savings you have and what other provision you have. It goes back a little bit to the last question because if you have a system where the only people who get state pension are the poorest, then it could disincentivise you to work earlier on in your life if you think you’re therefore gonna miss out on a means tested system and most people would feel that whilst they're working, they're paying into the system through national insurance to be able to draw on it when they need to — in their case, in retirement. But it is the case that there is additional support available for the poorest pensioners and also the changes that I made to the Winter Fuel Allowance means that that is no longer a universal benefit. And I think you only get it if you have a pension worth less than £30,000.
Justine Roberts: Okay. Universities and student finance, which is, as you can imagine, a big topic on Mumsnet. The design of Plan 2 tuition fees means that the majority of graduates will not pay off their loan balance and will be paying an extra 9% marginal rate for the first 30 years of their working life. While the proposed 6% cap is helpful for the higher earning graduates, lower earning graduates will not benefit unless the RPI rises over 6%. What can the government do to reduce the tax burden on lower earning graduates?
Rachel Reeves: Again, I absolutely recognise that the system is not working well enough. I guess quite a lot of the questions have been about what I inherited when I became Chancellor — whether it is high marginal tax rates for people earning over £100,000, whether it is the plan 2 student loans, whether it is public services that are not properly funded and public servants who aren't properly rewarded for the work they do. And my job as Chancellor is to make sure that we've got enough money coming in to pay for the things that we want to pay for — whether those are pensions, childcare, the health service, support for young people, support for people at universities, or apprenticeships, or further education colleges. And there's lots of things that you’ve said today and that your Mumsnet users are asking me where I think they've got a pretty good case. It's not right that you have such high marginal tax rates that discourage work. It's not right that kids are growing up in poverty. It's not right that people are having to pay so much for so long to service student debt they're never gonna pay off.
Justine Roberts: So you're going to fix it in the next budget?
Rachel Reeves: My job as chancellor is to make sure that we only commit to things if we know we can afford them. Because if I did try and fix all these things, it would either mean huge amounts of borrowing, which then actually pushes up interest rates — which will then mean it's even harder to get on the housing ladder as a mum or dad or as a family. Or it means taxing more, which means the same people are gonna be paying higher taxes but then being able to get something else back. And so my job is to balance those things. We have capped the student loan interest rates at 6%, we are introducing means-tested maintenance grants to help poorer students go to university. Can I fix everything straight away? No. Have I got a long list of things that I would like to do? Yes, absolutely. And I hope that I'm Chancellor for long enough that I'll be able to do a whole range of things.
Justine Roberts: Great. Well, you haven't got long so we're gonna try and rattle through some now. On the water companies — Someinternetuser says: why do we pay so much to water companies that aren't doing their job? Would you reconsider nationalising given they're dumping sewage and can't be trusted?
Rachel Reeves: Well look, we have introduced much higher penalties for water companies that are polluting. We are now monitoring all the time water quality, not just checking sometimes water quality. We have banned the payments of bonuses for companies that are consistently breaking those rules. And a number of other things as well. I think that is the right approach. If we started from scratch, would I have privatised those companies? Probably not. But to nationalise them would cost a huge amount of money that would have to divert from elsewhere. And in a world where our defence needs are growing, in a world where I expect most of your Mumsnet users are worried about the provision of education at their local schools, they may have a child or a parent on an NHS hospital waiting list — they would probably rather the money was going into schools, defence and hospitals than into nationalising an industry.
Justine Roberts: Okay. Eurotrotters asks: hi Rachel, you were pictured crying at PMQs last year, and that must have been a stressful time for you. Do you now regret that incident or do you feel that people should be less judged for showing often understandable emotions in the workplace?
Rachel Reeves: Well, I regret going to PMQs — but you know, if I'd have known that was going to happen, obviously I wouldn't have gone. I expect most of your Mumsnet users would've had a day at work when they felt overcome with emotion for whatever reason. I guess the difference in my job is that the TV cameras are on when that happens. So I'm not gonna apologise for crying. I don't think people should do that. But I think next time I feel like doing that, I’ll stay in the office.
Justine Roberts: Do you lie awake at night kicking yourself for going?
Rachel Reeves: I've got enough things to worry about at the moment — there's the conflict in the Middle East rather than pictures of me looking a little bit upset.
Justine Roberts: We haven't got long, so I'm going to cheekily ask you about one of our own campaigns at Mumsnet. 83% of our users would like to see a ban on social media for under-sixteens. They believe that it's causing really profound effects on kids' mental health. You've got children of that kind of age heading towards phone and social media use — where do you stand? Do you stand with the Mumsnet users?
Rachel Reeves: It’s such a difficult thing because I've got a 13-year-old and she does have a phone, and I've got a 10-year-old and he doesn't and has absolutely no interest in having one. I think that greater… I think it's difficult as a parent to be able to police this and having clearer rules would be very useful. Because I think if one parent does it, I think a lot of your users will feel this, if one mum, dad, person at home says "right, okay this is bad for you, you’re gonna regret it some day and we're gonna go cold turkey," probably not gonna have a very good relationship with your teenager. Whereas if it is a rule that applies to everybody, it'll be a lot easier for parents. I certainly held out in getting a phone for my daughter as long as I could, but didn't feel I could any longer because it's normal. And we have quite strict rules about what can be accessed and when the phone can be used. But as a parent, I'm very sympathetic to what Mumsnet users are saying. We are doing a consultation in government at the moment, and I hope that we can develop a better system than what we've got today and it's definitely interesting to see what other countries around the world are doing and how that is working. Because what we don't want to do is, you know, there’s got to be a lot of trust between parents and children and what you don’t want is for children to be doing something that's not allowed behind your back and not telling you. So we've got to make sure that whatever we do can work and doesn't erode that really important bond of trust I think.
Justine Roberts: Sure. Okay. I'm going to ask one cheeky little quick one — your thoughts on universal basic income?
Rachel Reeves: I'm not in favour.
Justine Roberts: Okay. There's no point in me asking your favourite biscuit because I know we've met before and it's a chocolate digestive.
Rachel Reeves: I do love chocolate biscuits, and I gave up chocolate for Lent so it's nice to see lots of them all four of them for me there.
Justine Roberts: I’ve got an alternative modern-day question — which is which is your favourite AI chatbot? What do you use?
Rachel Reeves: I don’t use anything.
Justine Roberts: You don't use any? None of the LLMs?
Rachel Reeves: No.
Justine Roberts: It could really help.
Rachel Reeves: Maybe that's where I'm going wrong.
Justine Roberts: Okay. Well, it's been a pleasure as ever. Thank you so much for your time.
Rachel Reeves: Thank you Justine.