There is growing criticism of Rachel Reeves for her orthodox approach to managing the public finances. While it is clear that modest reductions in spending put forward in the spring statement cannot be described as a return to austerity, they are expected to deliver considerable harm to vulnerable people at a time when wealth inequality continues to rise.

Critics also believe the chancellor’s policies to improve living standards are flawed, and more radical reforms of the way Britain’s economy operates need to be supported by the government. Here we look at some of the options open to the chancellor.

Borrow more

Asking the international money markets to lend the UK more money was like a free lunch in the years after the 2008 financial crash. It is a tragedy that the chancellor from 2010, George Osborne, spurned this opportunity.

These days, global lenders demand a much higher price from governments, and especially those sitting on large mountains of debt, like the UK. Reeves will spend more than £100bn on debt financing in the next financial year on a budget of £1.2tn. As Reeves said last week, “That is more than we allocate on defence, the home office and justice combined.”

Economists have tried to define how much borrowing is too much and always failed, which leaves the financial markets to decide. Last year France was told by the ratings agencies, after it went over 110% of gross domestic product (GDP), that its credit rating would be downgraded. Paris is now on track to save €50bn from its 2025 budget. The UK, which has a lower level of productivity than France and a more open economy susceptible to trade wars, seems to have hit the buffers when nearing the 100% debt to GDP ratio.

Tax more

Starmer has boxed in Reeves with pledges to maintain income tax, employee national insurance and VAT at current levels. Most economists agree that in a period of stagnation it would be a growth killer to raise them, anyway. However, there was a missed opportunity to raise fuel duty last year as an environmental measure when oil prices were low, raising almost £5bn (and Brent crude is still trading just above $70 a barrel).

The enormous hole in the public finances left by the Conservatives is also a reasonable excuse for breaching the income tax pledge and slapping a surcharge on millionaires. Tax experts don’t believe it could raise as much as the £460m a week claimed on the side of a bus funded by the group Patriotic Millionaires. That said, like fuel duty, it could raise enough to replenish welfare funds to allow for a more generously supported route back to employment for disabled people who want to work.

Cut spending in other ways

There is little fat on the bone of Whitehall departments. And while there are quangos that are wasteful, the savings from reforming or abolishing them will be small.

Another route could be to examine the £200bn of tax breaks identified by the National Audit Office that successive governments have failed to monitor and prove are effective. One of the largest tax breaks is the tax-free allowance for pension saving. This costs the government about £40bn a year. Would savers stop putting money in a pension if the government subsidy was reduced? No one knows.

Is it fair that pension savers can take a quarter of their pot as a tax-free lump sum? This subsidy is likely to come under review in the autumn budget, according to the Institute for Fiscal Studies.

Redefine investment

Many aspects of day-to-day spending can be considered investment. For example, there are projects that bring together local government and health service bodies to tackle the mental health crisis. With more than 1 million people on the waiting list for NHS talking therapies, a boost to spending would result in millions of pounds of savings. Academic studies show dramatic reductions in the level of support people need once they have been through the latest programmes.

The budget rule for investment is more relaxed than the budget rule for day-to-day spending. Switching some costs from one to the other would help Reeves keep within the targets for both.

Rewrite the budget rules

Reeves adopted looser fiscal rules than the previous government, but they are still proving to be a constraint in uncertain times.

The National Institute of Economic and Social Research is one of the biggest critics of the chancellor’s budget rules, arguing it creates unnecessary stress. It says the OBR could produce a “state of the economy” overview and only assess the government against targets Whitehall can control, such as welfare and public service spending.

It would mean that the recent spike in interest rates, which cost about £10bn in extra debt financing and was the primary reason for cuts in the spring statement, would be noted, but action could be delayed until it is known to be a persistent problem.

Abolish or reform the Office for Budget Responsibility

After 15 years, there is a growing concern that the OBR commands an undue influence over government planning. Its twice-yearly reports arguably force the Treasury to be tactical – constantly adjusting spending plans – when it wants to be strategic. The OBR is also viewed as conservative in its assessments of new ventures by the government.

While this was sensible when Liz Truss declared that £40bn of unfunded tax cuts would boost growth and eventually tax receipts from higher incomes, it might be considered less forward thinking when assessing the long-term benefits of state-funded mental health therapies. However, the OBR would benefit from being strengthened rather than abolished. It should have its own resources and staff, making it even more independent of the Treasury. The flipside of this reform would be that while its twice yearly reports would score departments against budget projections and continue to make an assessment of the economic outlook, the chancellor would be freed from the tyranny of continually adjusting plans to meet short-term targets.