‘Attack is the best form of defence,’ declares Rachel Reeves, sitting in a block purple dress in her office in parliament. The shadow chancellor is discussing what lessons for politics she learnt from chess. She was the British girls’ champion at the age of 14. ‘Thinking ahead. Trying to think what your opponent might do – and how you would respond to that. I was a very aggressive chess player: attack, attack, attack. All the time!’

She has kept such tactics since she entered politics, having previously been an economist at the Bank of England. Her early call for a windfall tax saw her named ‘Chancellor of the Year’ at The Spectator’s Parliamentarian of the Year awards last month, on the grounds that, in the year of four Tory chancellors, her policies had the most intellectual influence. The award hangs behind her desk.

The idea, she says, struck her long before Russia’s invasion of Ukraine. She could fore-see an energy price surge which would profit companies and hit consumers hard. A textbook case, she thought, for a windfall tax. ‘Most of my Christmas recess last year was spent on calls and asking people to write me papers,’ she says. ‘I spoke to some former people at BP and Shell, former economics teachers of mine at university. We looked back at what Thatcher, Osborne and Brown did and I was convinced that if it was a genuine windfall profit, the evidence shows that it doesn’t have an adverse effect.’

After meeting with Keir Starmer and Ed Miliband – the shadow energy secretary – they decided to call for a windfall tax in January this year in a bid to be ‘three moves ahead’. ‘Like with all these things, often you think, “well the government are going to have to do it. But if we get there sooner, we’ll get some of the credit,”’ explains Reeves. The Tories have since learned to love her windfall tax. Six months after Rishi Sunak introduced one as chancellor, Jeremy Hunt used the Autumn Statement to extend the tax on North Sea oil and gas operators by two years until 2028, and increase it from 25 per cent to 35 per cent.

‘We’re all paying more taxes than we’ve ever paid before in our lives for public services that are on their knees’

Winning such arguments is one of several reasons that Starmer’s party has a spring in its step. In the face of Tory turbulence, including the fallout from Liz Truss’s not-so-mini Budget, Labour have surged ahead of the Conservatives in the polls by a margin of almost two-to-one. Bookies overwhelmingly expect Starmer to win the next general election. If he does, and Reeves stays in post, then she will become the first Labour chancellor in 14 years and the first woman to ever hold the office.

Reeves’s strategy is to be reassuring. ‘Boring snoring,’ she laughs – a reference to an unflattering comment made about her by Ian Katz, now chief of Channel 4. Given the drama of Labour’s Corbyn years (she refused to serve under him), she sees a virtue in being seen as unexciting. ‘When I became shadow chancellor, I identified four challenges that Labour had on the economy. The first was to be trusted with the public finances. Second was to be seen as a party of wealth creation, not just of redistribution of it. The third was to be in touch with people’s everyday concerns and the fourth was to have something to excite people and motivate people to go and vote. But they were in that order of importance,’ she explains.

In her conference speech this year, she received a standing ovation mid-speech when she said Labour were the party of fiscal and economic stability. She was taken aback – she hadn’t intended it as an applause line. ‘Pat McFadden [the shadow chief secretary] said afterwards: “My work is done!”’

She says she would not borrow-and-spend as Truss did and, like Sunak, she accepts the Office for Budget Responsibility’s figure of a £55 billion job of austerity to be done. ‘I think one of the problems with the Truss/Kwarteng administration was that they tried to override the independent economic institutions which are really important for UK stability,’ she says. ‘So I’m certainly not in the business of saying: “OBR you are talking a load of rubbish.”’

The reason tax is so high under the Tories, she says, is because they have run out of ideas about how to grow an economy. ‘The average growth rate for the last 12 years has been 1.4 per cent. Under Labour, it was 2.1 per cent. So growth is obviously really important for dealing with the sort of fiscal situation: keeping taxes low while having money to invest in public services. Why has this government increased taxes 24 times since Boris Johnson became prime minister? Because [the Tories] are failing to deliver economic growth, so every time they need money to put into one public service or another, it comes through higher taxes.’

Reeves sends out 3,200 Christmas cards each year. She starts signing them in the summer

‘There is literally nothing in this country that works at the moment,’ she says. ‘And we’re all paying more taxes than we’ve ever paid before in our lives for public services that are on their knees. It’s not good enough.’ Are those taxes too high? They are for ‘working people’, she says. ‘We voted against a load of them.’ Would she lean towards business taxes over personal taxes? ‘The thing that I’ve been focusing on is looking at tax loopholes. Private equity, non-doms and private schools are all examples of loopholes that need to be closed.’ But the money raised here would be small: less than £5 billion against a current tax burden of about £900 billion. Reeves may yet end up staying very close to the path Sunak has plotted.

While Jeremy Corbyn was keen on ideas like ‘modern monetary theory’ and the thought that borrowing could take the strain, Reeves’s position is one of fiscal conservatism. ‘There will be nothing in our manifesto that is not fully costed and fully funded. That does mean that there are some things – good Labour things that make a difference to people’s lives – that we won’t be able to do as quickly as we want.’ But she says she will not wear a Tory straitjacket. ‘We will make different choices. Fairer choices, when it comes to tax. Also, plans to grow the economy.’

She is less forthcoming when asked to elaborate on growth plans. She intends to spend more on environmental priorities and talks of green jobs, but Labour has published nothing to suggest that its policies would make any significant difference on growth. And what about VAT on schools? If schools are instructed by a Labour government to behave as companies, rather than charities, will they be able to afford so many bursaries and the sponsorship of state schools?

‘I use the analogy from 1997 when Labour got rid of the assisted places scheme,’ she says. ‘We used that money to reduce class sizes for five-, six- and seven-year-olds to make an impact on the lives of many, many more young people. It is, in the end, about priorities. Is £1.7 billion better spent on tax breaks for private schools or is it better spent in all of our state schools?’

Would she really raise so much if 90,000 private school pupils are forced back in the state sector because their parents are un-able to afford the higher fees? ‘Over the last decade or so, private schools [fees] have risen at a much faster rate than inflation. It hasn’t had any impact on the numbers going to private schools,’ she says. She adds that she’d be ‘amazed’ if any pupils in her constituency enjoyed such bursaries.

In the end, she says, it’s a matter of equity. ‘VAT exists on almost all purchases. If you are a member of a gym, you pay VAT. If you buy a new washing machine, you pay VAT. Private school fees are a sort of anomaly.’ So how about at-home tutoring? ‘I don’t pay for anyone tutoring my kids, so I don’t know about that.’ Might she go further than just independent schools? ‘I’m going to announce what we’re going to do – and we’re going to stick to those things.’ But if Labour regards the absence of tax as anomalous, where will it stop?

When Jeremy Hunt entered No. 11, he sought the advice of all the living former Tory chancellors. Did Reeves do the same when she was made shadow chancellor – and schedule a chat with John McDonnell? ‘He wasn’t my first port of call – or any port of call,’ she replies sharply. ‘But I talked to Gordon [Brown] and Alistair [Darling] a lot actually.’ When it comes to a modus operandi she has an unlikely role model. ‘Politically, we disagree a lot. But I think the relationship between Cameron and Osborne is something I would want to emulate with Keir.’ Already, she says, their teams are so close that Starmer told her recently that he can’t remember who works for him and for her.

Reeves is a meticulous planner. One of her objectives now, she says, is Christmas cards. She sends out 3,200 each year. Personally dedicating and signing them is quite an operation which, for her, starts in the summer. ‘I break them down,’ she says. ‘I’ve got members, schools, churches in the constituency, GPs surgeries, MPs, Lords.’ She takes out a card and signs one to Spectator staff as she speaks.

The plan she most wants to execute is Labour’s return to power. ‘Labour doesn’t always have that focus on winning,’ she says. ‘It has been really frustrating. I gave up a good career outside of politics to do what? Carp and complain? I’m sick of doing that. And this is a real opportunity that Labour’s got now – Keir’s leadership, turning things around, focusing on the electorate, being trusted again on economic competence. I really think we can do it.’

QOSHE - Rachel Reeves: ‘Attack is the best form of defence’ - Katy Balls
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Rachel Reeves: ‘Attack is the best form of defence’

7 4 1
08.12.2022

‘Attack is the best form of defence,’ declares Rachel Reeves, sitting in a block purple dress in her office in parliament. The shadow chancellor is discussing what lessons for politics she learnt from chess. She was the British girls’ champion at the age of 14. ‘Thinking ahead. Trying to think what your opponent might do – and how you would respond to that. I was a very aggressive chess player: attack, attack, attack. All the time!’

She has kept such tactics since she entered politics, having previously been an economist at the Bank of England. Her early call for a windfall tax saw her named ‘Chancellor of the Year’ at The Spectator’s Parliamentarian of the Year awards last month, on the grounds that, in the year of four Tory chancellors, her policies had the most intellectual influence. The award hangs behind her desk.

The idea, she says, struck her long before Russia’s invasion of Ukraine. She could fore-see an energy price surge which would profit companies and hit consumers hard. A textbook case, she thought, for a windfall tax. ‘Most of my Christmas recess last year was spent on calls and asking people to write me papers,’ she says. ‘I spoke to some former people at BP and Shell, former economics teachers of mine at university. We looked back at what Thatcher, Osborne and Brown did and I was convinced that if it was a genuine windfall profit, the evidence shows that it doesn’t have an adverse effect.’

After meeting with Keir Starmer and Ed Miliband – the shadow energy secretary – they decided to call for a windfall tax in January this year in a bid to be ‘three moves ahead’. ‘Like with all these things, often you think, “well the government are going to have to do it. But if we get there sooner, we’ll get some of the credit,”’ explains Reeves. The Tories have since learned to love her windfall tax. Six months after Rishi Sunak introduced one as chancellor, Jeremy Hunt used the Autumn Statement to extend the tax on North Sea oil and gas operators by two years until 2028, and increase it from 25 per cent to 35 per cent.

‘We’re all paying more taxes than we’ve ever paid before in our lives for public services that are on their knees’

Winning such arguments is one of several reasons that Starmer’s party has a spring in its step. In the face of Tory turbulence, including the fallout from Liz Truss’s not-so-mini Budget, Labour have surged ahead........

© The Spectator


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