Credit to Rachel Reeves’s team: the shadow chancellor’s Mais Lecture this week was briefed perfectly. If you did not attend her hour-long lecture in the City, or read it meticulously afterwards, you would have gathered from the headlines and snippets that her remarks invoked Margaret Thatcher.
You might even think that her plans for the economy don’t deviate much from the current Government’s strategy. The biggest policy announcement, after all, was her commitment to keep Jeremy Hunt’s target to get debt falling as a percentage of GDP in the fifth year of a rolling forecast. Nothing to see here, then – just more of the same.
But the Mais Lecture at Bayes Business School isn’t designed for policy announcements. It is about presenting an economic worldview – one which, in the case of politicians, would be used to govern. It’s how we discovered that Rishi Sunak, long before he became PM, would prioritise fiscal restraint over tax cuts. And it’s how we now know about Labour’s plan to lurch Left, towards a more dominating, interventionist state.
Snippets of Reeves’s lecture, trailed before the event, compared the current economy to the 1970s “inflection point”, spurring on those comparisons to Thatcher. But her lecture made clear that Reeves considers Thatcher’s chancellor Nigel Lawson “wrong not only in application but in theory”, including his efforts to remove state meddling in the market economy. It’s not just the Thatcher era Reeves rejects, but the neo-liberal leanings of Tony Blair’s New Labour, too.
That’s because practically every aspect of the agenda Reeves laid out this week is about creating a more hands-on state. The shadow chancellor set out her philosophy of “securonomics”, which rejects the economic liberalism of the past 40 years. Reeves insists instead that “governments and policymakers are recognising that it is no longer enough, if it ever was, for the state to simply get out of the way, to leave markets to their own devices and correct the occasional negative externality.”
This explains why there was not a single reference in the Mais speech to the “free market”. For Reeves, it’s all about guaranteeing “security” – the word that dominated her speech. Could all the major economic shocks of the past four years really have been mitigated by an all-powerful state? Even those that were largely out of the UK’s control?
Reeves, unsurprisingly, was light on the detail here. She insists her version of industrial strategy would be “strategic” and “selective” in order to avoid accusations of protectionism. But why Reeves will be more successful at picking winners and losers was never quite explained.
Having abandoned its centerpiece £28 billion a year green “investment” plan – wholly unaffordable now that we’re back to more normal interest rate levels – what exactly is Labour’s strategy? If this week’s hint, reported in this paper, that the party will resuscitate the northern leg of HS2 is anything to go by, don’t expect some transformed, nimble state. Expect more waste, both in terms of money and time lost to outdated ideas.
After years of economic shocks and uncertainty, many people are understandably looking for a bit of peace and calm. But the promise that nothing too bad will be allowed to happen – an unrealistic pledge to begin with – is also essentially the guarantee that nothing too good can happen, either. The mitigation of risk by the state also reduces the rewards that can be achieved. At a time of economic stagnation and declining living standards, it hardly inspires.
Reeves insists that “securonomics is about providing the platform from which to take risks”. Yet the speech made clear that it will all be on the state’s terms. “Enterprising business” will not be able to escape “strategic government”. Is this a trade-off worth making?
William Turner is a seasoned U.K. correspondent with a deep understanding of domestic affairs. With a passion for British politics and culture, he provides insightful analysis and comprehensive coverage of events within the United Kingdom.
