Rachel Reeves has one job to do before the Budget – and she is failing spectacularly

The chancellor seems unable to decide whether the rich are her friends or enemies, writes Chris Blackhurst. She needs a clear narrative – and quick – to stop further damage to the economy

So we’re beginning to get the idea about what’s coming our way in the Budget. Rachel Reeves told the International Monetary Fund in Washington this week that those with the “broadest shoulders” should pay more tax.

The chancellor has ruled out an annual levy on assets like property, land and pensions, but is looking at other ways to target wealthy people. “I do think those with the broadest shoulders should pay their fair share of tax,” she said. Taxes on the wealthy would be “part of the story”, she added.

For good measure, Reeves said: “We are not going to be introducing a wealth tax. We already have a number of taxes that do target wealthy people, and some of those were increased in the Budget last year.”

Meanwhile, officials briefed that Reeves will avoid areas that could hit economic growth. “It’s not all about tax, but I do want to have a competitive environment for all businesses in Britain,” said Reeves. She intends to double the number of visas to highly talented, high-paid individuals, for example.

There is one problem, here, though. Reeves is spouting nonsense. It should be clear that she has completely failed to square wealthy people, however they are defined, with those folks she is so desperately trying to attract, to bring their skills and their money to Britain. Reeves feels the need to pander to her party by saying she will clobber the rich, somehow, while, at the same time, trying to reassure the world that we like them, really. She is attempting, presumably at the behest of her advisers, to negotiate a balancing act and failing spectacularly.

Capital gains tax appears to be in her sights this time, to add to VAT on school fees, scrapping non-dom tax status and increased taxes on private jets. Those measures from her first Budget last year fell into the category marked old school “eat the rich”, “not many affected, they can afford it”, so who cares? But they paid no heed to the modern world. Similarly, Reeves doubtless thought increasing employers’ national insurance would also be swallowed without much harm done.

Her tin ear means she does not grasp the signal they collectively send: that putting them altogether and throwing in CGT as well makes it plain that Reeves and her colleagues are intent on pursuing the rich. Heavens, she is saying as much. But if you’re someone of special ability, thinking of working in Britain or wondering whether to build your next factory or open a new office here, what do you see? A government that says it wants your commitment but equally views you as a cash cow, a resource to be plundered for extra revenue.

This, while other countries are bending over backwards to draw and accommodate wealthy foreigners, offering them inducements and doing all they can to smooth their path. Which would you choose?

Reeves may try to claim this is not her view overall, that a public funding hole requires her to take special action, that what she is doing today will not be repeated, but look at the direction of travel. The rich get the message. Many of those who are based in Britain have left, and more will go after this; as for those who might have considered opting for Britain, who can blame them if they head elsewhere?

What is worrying is the lack of understanding as to how the investment landscape has changed; people are more connected, more mobile than they were, they can base themselves and operate effectively anywhere. You cannot be slapping them with one hand and greeting them with the other.

Alarming too is the drip, drip of indications, hints, emanating from Reeves and her coterie. The Budget is still over a month away. For months, we’ve been subjected to a flow of reports about the plans. Some are denied, some are not. In this case, it was Reeves herself throwing fuel on the fire.

To what end is hard to fathom. Businesses and individuals are putting decisions on hold until they see what transpires. In the City, the talk is of a Budget at the end of November, then we’re into Christmas, and nothing will pick up again until mid-January. The property market is also stuck – the noise surrounding CGT may see some homeowners try to get a sale away, but they will be hard-pressed to complete the deal in time, which may explain why Reeves felt emboldened enough to say what she did this week.

Sir Keir Starmer and Reeves say to whoever will listen that they desire to get Britain moving, that they are going “further and faster in kickstarting economic growth”. But Britain is at a standstill, and nothing is moving ahead of her address. Given the clues so far, not much may shift afterwards.

Theirs is an outmoded methodology that combines with an outdated approach to business, the shape of wealth and financial flows. They just do not get it.

They say they do, of course, but that only serves to make it worse – the smell of hypocrisy, of saying one thing while doing another, is strengthening. No amount of air freshener, or in their case, platitudes, will suffice.