If there is one comparison likely to land a politician in hot water with both ends of the political spectrum, it is comparing their intentions with the late Margaret Thatcher: icon on the right, villain on the left.
Rachel Reeves’ pitch in a keynote speech compares the task of economic recovery facing a likely Labour government to that faced by Thatcher in 1979. It was, as Sir Humphrey might have said in Yes Minister, undoubtedly in the “very brave, shadow Chancellor” school of political communications.
The intention is “a decade of national renewal” – and the clue is in the first two words. Labour’s leadership has been in deep and sometimes contradictory mode about what kind of economic medicine it will be prescribing in the election campaign, and how long it needs to make a difference.
One school of thought has advised Reeves to stick to a cautious message that her party can hardly fare worse than the slow Tory recovery from Covid and the cost of living squeeze, which has meant hardship for the less well-off and belt-tightening for middle-income voters hit by high marginal taxes.
The other is that on this trajectory, Reeves as chancellor would simply find herself replacing Jeremy Hunt as a Chancellor trying to make wine out of water by skimming public spending and trying to avoid further tax rises. There is one other golden egg chancellors inevitably hope will be laid, which is that the economy will start a sustained growth spurt and a new era of UK Plc looking like an attractive place for global capital to invest – and stay invested as companies grow.
Reeves’ answers are pretty Thatcher-ish too – supply side reform to make the UK a more attractive destination for business and more productive in an era of global competition. As one former Tory chancellor mischievously texts: “SO nice to hear from a Conservative Chancellor – oh, wait a minute…”
Reeves’ party has enough inventory of voters who consider “Maggie” a swearword. Even before the speech had been made, Reeves’ spokesperson had to quell left-wing disquiet by pointing out that Reeves would say that “unlike the 1980s, growth in the years to come must be broad-based, inclusive, and resilient”. Reeves knows full well that she is inviting a lot of articles on the evils of the 1980s, but also that the majority of those votes are likely to remain with Labour.
What her party needs is more solid reasons why legacy Tory voters should move across the column. Keir Starmer does not test especially well in this metric in private polling – his most authentic brand is as a centrist Labour figure, standing for self-betterment with an understanding of the hardship families face, from his own background and commitment to progressive legal causes.
That leaves the economic territory open to his shadow chancellor to define. The trouble with her “Maggie-lite” list is that it is a pretty good description of the aspirations of recent Tory chancellors from George Osborne to Jeremy Hunt (and even the short, explosive stay of Kwasi Kwarteng). Themes briefed out ahead of Reeves’s speech include “bold supply-side reform to drive investment”, “remove the blockages constraining productive capacity” – plus something that sounds entirely mysterious and was clearly written by the economics post-grad on her team: an “economic settlement, drawing on evolutions in economic thought.”
The question is what has stopped these things happening already, and that will be the challenge for Reeves if the comparison with the Thatcher years – in terms of impact rather than rhetoric – is to be taken at all seriously.
In essence, Labour’s probable next resident of Number 11 needs to resolve a conundrum of her own making. The retreat from the £28 billion annual green technology investment leaves a huge question mark over what will drive economic change. Reeves’s thinking was based on Joe Biden’s Inflation Reduction Act, which combined climate-friendly finance and investment with siting tech jobs in the US. It has turned out to be hard to copy without a significant rise in borrowing – which is not a subject Reeves is keen to broach for the foreseeable future.
The next “what about” question is the one Mrs T would surely have scribbled fiercely in the margins of this speech. (The annotations she sent to chancellors down the years were very often as punchy as “why?” or “where is the money coming from for this?”) Reeves would like to pivot more decision making over public finances to the Treasury’s Enterprise and Growth Unit. As Tony Blair said in a recent session I attended at the Institute for Government’s Future of Government commission, the Treasury can be good at stopping ministers from spending money badly, but less good at helping government spend money well. So the thinking is sound.
In Reeves’s pitch, however, a lot of weight is given to the idea of institutions like the Treasury and the Office for Budget Responsibility being able to combine their roles as gatekeepers of sound finance with a more proactive one. The hope is that they would bring more investment and innovation into the UK and support the medium-sized businesses, who often feel eclipsed by the lobbying power of banks and corporations. Are they really up to this – and where does the new blood or fresh ideas come from?
In fairness, Reeves does know a thing or two about financial businesses outside the bubble of the City and London hedge funders. She worked for the HBOS mortgages team in a senior role in Leeds. That, in her personal narrative, is the equivalent of Baroness Thatcher’s story of making sums add up alongside her father as a Grantham storekeeper and going on to work as a chemist in industry after Oxford. They might in fact have got along pretty well – and the generational shift the Labour Chancellor represents means that she is not as caught up in the late-1980s Maggie hatred as many on her own side.
But to make this disruption work will be hard yards. Many steps, like keeping business taxes low, will not land well with many of her colleagues. What sounds like “cutting red tape” in the abstract can also have knock-ons for employment regulation which unions will not warm to. The truth of the Thatcher revolution is that she knocked out a fair few teeth on her own side to push it through – and hired her own ideological bruisers from Norman Tebbit to Sir Keith Joseph to break down existing orthodoxies.
And if Reeves is serious, some of her influences and practitioners are going to have to come from backgrounds and viewpoints which are more challenging about what ails UK business, and less cosy than the recent appointment of ex-Bank of England governor Mark Carney.
There is one other point which should not escape us and probably hasn’t escaped Starmer either. Margaret Thatcher was the leader of her party and Prime Minister when she rocked the economic establishment of her day. Rachel Reeves is the second-in-line to the throne. Interesting. Keir: the lady has ambition. Watch out.
Anne McElvoy is host of the Power Play podcast for POLITICO
How Thatcherite is Rachel Reeves? Enough to spook the left
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19.03.2024
If there is one comparison likely to land a politician in hot water with both ends of the political spectrum, it is comparing their intentions with the late Margaret Thatcher: icon on the right, villain on the left.
Rachel Reeves’ pitch in a keynote speech compares the task of economic recovery facing a likely Labour government to that faced by Thatcher in 1979. It was, as Sir Humphrey might have said in Yes Minister, undoubtedly in the “very brave, shadow Chancellor” school of political communications.
The intention is “a decade of national renewal” – and the clue is in the first two words. Labour’s leadership has been in deep and sometimes contradictory mode about what kind of economic medicine it will be prescribing in the election campaign, and how long it needs to make a difference.
One school of thought has advised Reeves to stick to a cautious message that her party can hardly fare worse than the slow Tory recovery from Covid and the cost of living squeeze, which has meant hardship for the less well-off and belt-tightening for middle-income voters hit by high marginal taxes.
The other is that on this trajectory, Reeves as chancellor would simply find herself replacing Jeremy Hunt as a Chancellor trying to make wine out of water by skimming public spending and trying to avoid further tax rises. There is one other golden egg chancellors inevitably hope will be laid, which is that the economy will start a sustained growth spurt and a new era of UK Plc looking like an attractive place for global capital to invest – and stay invested as companies grow.
Reeves’ answers are pretty Thatcher-ish too – supply side reform to make the UK a more attractive destination for business and more........
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