Today saw a shift in rhetoric from Chancellor Rachel Reeves as she moved to promise the Labour conference a more optimistic vision for the country.Â
But quietly there also appears to have been a shift in approach, which could mean a markedly different landscape for public spending come the budget on 30 October, allowing far greater scope for Labour to borrow and spend.
Politics live: ‘More optimistic’ Budget could be in store
The easiest way to see the change is to compare the chancellor’s actions before and after the summer.
In July, when Ms Reeves created the £22bn “black hole”, she gave us a taste of how she intended to fill it.
Not only was there the means testing of the winter fuel allowance, but she did something the Treasury have been wanting for years – to cancel a whole load of investment projects, including road building with the A303 down to Cornwall, as well as delaying the hospital building programme.
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This was as striking as it was confusing. Such projects would be the cornerstone of any government’s growth plan.
Yet in the eternal tension in Labour between fiscal discipline and growth, the former had won out seemingly at the expense of the latter.
And Treasury mandarins at the time were clear. The best way to fill an immediate £22bn black hole would always be to delay or can these investments – or capital projects.
Now fast forward to the Autumn and £16bn of the black hole remains to be filled on 30 October.
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There is no doubt that some tax rises, welfare cuts and spending curbs may be in the mix. But I am told that borrowing might also be used to plug this hole.
This is by no means certain – the government’s first fiscal rule could yet prevent this from happening.
But I am told they may reduce the amount of cuts or tax rises simply by putting it on the nation’s credit card once more.
This is just one of the ways that the government may allow itself to borrow more.
There is the well-trailed discussion about redefining debt in the second fiscal rule – a technical change that could free up £15bn or more.
There’s discussion about how to treat other assets like GB Energy on the balance sheet, which again could allow the government to borrow more within its rules.
The markets are unlikely to take fright. They have been convinced, it seems, by the vibe of Ms Reeves as an iron chancellor.
However, there is now a chance the optimistic vision she outlined today could come sooner than we think – thanks to higher borrowing.
