Rachel Reeves and the Labour leadership team have been conducting a dominant “smoked salmon offensive” on UK business leaders since Kier Starmer became leader in 2020. In a constant succession of business conferences and meetings, the party has gone all-out to convince the sector that it is supportive of business interests. With Labour holding a 20%+ lead in the polls since January, and a successful showing at the recent local elections, what exactly has Reeves promised the business community. More importantly, can it truly make things better?
In May 2023, Rachel Reeves arrived in Washington DC to set out the economic vision of a future Labour government. It’s rally cry, ‘Securonomics’, would prioritise economic strength and resilience in the face of an uncertain world, with an increasingly interventionist state using public investment to underpin and unlock further private investment in key sectors. With grand proposals for a £28bn a year green investment programme, the creation of GB Energy and the sweeping removal of what Reeves deemed a “ludicrous planning system,” a green ‘new deal’ seemed to be in the offing.
Yet much had changed by the time Rachel Reeves stepped onto the stage to deliver the Mais lecture earlier this year. Gone were the promises of £28bn a year for green investment and large-scale spending policies. Instead, Reeves focused on prioritising return on investment by promoting low-cost reforms with wider structural impacts on the economy. Highlights of the speech included commitments to increase oversight of the Office of Budget Responsibility, reduce the frequency of major fiscal events to once a year, and strengthen the Enterprise and Growth Unit to “hardwire economic growth” into the budget.
Whilst not exactly riveting, Reeves argues that structural reform is exactly what is required to drive Britain’s economy forward, all the while remaining buoyant about Labour’s plans to reform planning laws, claiming the reforms will “kickstart 1.5 million new homes,” and create new industries across the nation.
This combination of reforms, Reeves asserts, will bring back economic stability to the nation and create security for consumers and business alike. With stability comes investment and a belief that it will revitalise productivity.
Conversely, Reeves’ critics have lambasted her economic vision for its, well, lack of vision. One economic journalist exclaimed that Reeves’ Washington and Mais speeches failed to provide anything to get stuck into. They went so far as to describe Reeves’ economic outlook as suffering “from a maddening lack to detail.” Others question the simple reality of an economic transformation achieved by reform alone without large scale spending. Those who do analyse the policies have said that it does little to encourage the public to save more, which they argue would have a greater impact than economic stability on the rate of business investment.
Nevertheless, a third stream of thought, mentioned by the Barclays CEO at Davos, is that in this era of economic constraint little separates Labour’s and the Conservative’s economic plans.
With both sides grappling with the idea of prolonged tightened government expenditure, neither party have committed to major spending programmes. Rather, Chancellor Jeremy Hunt has taken to “stealing” various Labour ideas to raise money.
If both parties are so aligned, can Labour’s ‘Securonomics’ truly deliver on its promises to kickstart the British economy or is it merely a shadow of current Conservative principles in disguise?
by Jake Canton Perry, Client Executive