Fresh off the release of a soundbite that said last Wednesday’s budget only “hide the cracks of 13 years of economic failure”, Shadow Chancellor Rachel Reeves appeared on Radio 4’s Today programme. presenter Amol Rajan read him a list of childcare measures announced in the budget. What did the Labor Party oppose, he asked, and what would she and her party do differently?
Reeves hesitated for a minute, then admitted she would support them all.
Rajan tried a different tactic. Labour’s Education spokeswoman Bridget Phillipson had recently delivered a major speech on childcare, but it did not contain any costed proposals. So what was Labour’s childcare policy really? Reeves hesitated again, then said, “We’ll all make our plans closer to an election.”
Rajan moved on to immigration. Did the Labor Party support higher or lower net migration? Reeves mumbled something about apprenticeships.
What about tax thresholds? Do Labor support or oppose government policy? Reeves dodged, before insisting, “I have plans!” What were those plans regarding tax thresholds, Rajan again asked. “I can’t say,” Reeves replied.
Labour’s shadow Chancellor Rachel Reeves (left) is considered one of her party’s brightest stars. Chat with one of Sir Keir Starmer’s crew (right), and they talk about her in an almost reverential tone
Labour’s shadow chancellor is considered one of her party’s brightest stars. Chat with any member of Sir Keir Starmer’s team, and they’ll speak of her in an almost reverential tone. “Rachel is a brilliant performer,” a Starmer ally told me recently. “She’s the real deputy leader.”
At the moment, Reeves is not performing brilliantly. She is pedestrian. She is overhyped. And as last week showed, it opens the door to a Conservative pushback on the economy.
Ask Reeves’ cheerleaders if she’s really that great, what did she actually do, they’ll stare at you blankly. As if some sort of sacrilege had been uttered. Then they reach for the same well-worn list of so-called accomplishments.
In the lead, there is Labour’s lead over the economy. Voters currently rate Labor higher on economic competence, with YouGov’s tracker on the issue giving it a small, if unspectacular, six-point lead. But this represents a drop of 17 points since last October. And given the economic pain unleashed by the Truss budget, the cost of living crisis and the highest tax burden since World War II, that hardly represents a ringing endorsement of Labour’s own economic policy offer.
Reeves’ allies are also keen to point out what they call his “economic outreach.” One told me, “She’s done a lot of work to rebuild relationships with the business community – and it’s working. You could see him at the party conference. The suits were back.
And again, it’s true that UK business meeting rooms are opening up to Reeves and his team. But that’s just to be expected. UK plc chief executives can read opinion polls as well as anyone else. They recognize the 44-year-old former Bank of England economist is on course for No 11 and make the appropriate insinuating noises.
But in addition to being showered with warm words, they are as much in the dark about the details of Labour’s economic strategy as the rest of the country. Another success cited by admirers of Reeves is the claim that she outflanked the government on the windfall tax for energy companies. “That was Rachel’s whole strategy,” a shadow cabinet colleague told me. “It tied Boris Johnson, then Truss, in knots. It was one of our biggest victories.
Reeves is not trying to win the economic debate. Instead, she sits and hopes Jeremy Hunt (pictured delivering his budget to the House of Commons on Wednesday) and Rishi Sunak lose it
But that wasn’t Rachel Reeves’ strategy. It was Gordon Brown’s. The idea of using a windfall tax on blue chip profiteers to draw a political dividing line between Labor and Tories was first floated in the mid-1990s. appropriating nearly 30 years later is telling.
Labor likes to claim that their economic policy vacuum is the product of tactical ingenuity. ‘We are not going to give the Tories any easy targets,’ one adviser said. “We’re going to keep our powder dry until the time is right.”
But Reeves’ powder gets so dry it’s in danger of flying into the air.
At the equivalent stage of the election cycle in the 1990s, Gordon Brown had taken control of the economic debate with a series of bold political initiatives. An exceptional tax. A national minimum wage. Public-private partnerships. Workplace wellness program.
What does Rachel Reeves offer? A National Economic Council. A modern industrial strategy. An abstract ambition for Britain to somehow have the highest sustained growth in the G7.
Even the one major plan she has announced – her insanely expensive £28billion Green Industrial Revolution – is watered down, with Reeves now saying it will be contingent on her fiscal and debt reduction rules.
Labor strategists believe they are playing down the chances of the Tory attack machine coming back to life. But the opposite is true.
For the first time since Boris Johnson found himself embroiled in the Partygate farrago, Tory officials believe they may have identified a path to victory. With the economy as a compass.
“Labour’s economic strategy is puzzling,” a senior Conservative adviser told me. “It’s just a lot of vague nonsense. There’s no coherent plan. The fastest growing G7? Well great, we all want that! The question they have to answer is how are they doing? deliver it.
Ask this question of any Shadow Minister and you will be met with blank stares. The reality is that Reeves is not trying to win the economic debate. Instead, she sits and hopes Jeremy Hunt and Rishi Sunak lose it.
But it’s no longer the surefire bet it was back when Liz Truss and Kwasi Kwarteng set the economy on fire. While that didn’t get the political juice pumping, Hunt got his budget right.
“Given the limited wiggle room – and the limited amount of money available – it worked out well,” a Treasury ally said. “We know people wanted us to do more, especially on tax cuts. But we will get there. This laid the groundwork.
Meanwhile, Labor is growing nervous over the way the dire growth forecast for 2023 is slowly being revised upwards. On the eve of the budget, Reeves ran an ad which stated, “Under the Tories, the UK is the only G7 country to have negative growth this year.” This was a totally false claim based on an outdated forecast from the International Monetary Fund. But it illustrated how keen the Shadow Chancellor was to manipulate the economic narrative, rather than relying on facts.
Labor leader Keir Starmer, Shadow Chancellor Rachel Reeves and Scottish Labor leader Anas Sarwar meet staff at a Siemens rail infrastructure factory on March 10, 2023 in Glasgow
Ministers also believe Reeves fell into a trap by pledging to reverse the scrapping of the £1m tax-free retirement allowance for life. One said to me, “It’s weird. Why did the Labor Party suddenly decide to go to war with people like doctors, head teachers, air traffic controllers, the top army officers and civil servants?
For their part, Labor strategists say pension reforms are another Tory goal – one that will once again allow them to be portrayed as siding with the wealthy rather than hardworking families. And although the Office for Budget Responsibility rejected its prediction that the economy is heading into a technical recession, its forecast of a 0.2% contraction in 2023 should give Sunak and Hunt cold comfort.
Any form of sustained economic contraction will have a negative – and from the government’s perspective, probably terminal – impact at the ballot box. But, for now, conservative spirits have been lifted. “We can now see a path to stay in power,” one official told me, adding jokingly, “It’s a very narrow path.” But luckily Rishi and Jeremy are both very thin!
Rachel Reeves’ job is to block that road. But for now, she is failing. If Labour’s Shadow Chancellor really has a plan to take Britain to the highest growth of any major world economy, great. It is high time to share it with all of us.