Labour’s Iron Lady? How ‘boring, snoring’ Rachel Reeves roared into contention

In a commanding speech which energised a rather flat Labour conference, Rachel Reeves tried to answer the $64,000 question: how could a Starmer government do anything given what she earlier admitted would be its “dire” economic inheritance?

The politician once dismissed as “boring, snoring” came to life with a barnstorming performance that immediately sent Labour tongues wagging that she looked not only like becoming Britain’s first female chancellor but also a future leader of the party.

“Leadership bid,” one wag quipped as they left a conference hall which had cheered Reeves to the rafters every time she punctuated her address by saying Labour is ready to serve, lead and rebuild Britain.

The shadow chancellor has no plans to raise income tax or impose a wealth tax – and today she reiterated her pledge to stick to her “iron-clad” fiscal rules. Indeed, she styled herself as Labour’s Iron Lady, without mentioning Margaret Thatcher.

A sure sign Labour has changed: Reeves pleased the Labour crowd without really spending any money. She has to set an example when she is putting a red pen through the plans of shadow cabinet colleagues. Some of her pledges today – a real living wage, equal pay for women – would be funded by employers. Her crowd-pleasers might even raise some money – halving the government’s bill for consultants, clawing back the £7.2bn of fraudulent claims by businesses during the pandemic.

Inevitably, her answer to the big question was that Labour would boost the UK’s sluggish level of growth. She was more convincing on the “how” question than Keir Starmer was on BBC TV Sunday, when he was “confident” of securing it. Voters will need a bit more than that when they don’t have much confidence in promises by any politician.

Reeves at least made a start in explaining how Labour would get growth – for example, fast-tracking the planning process for critically important projects on green energy, transport and housing to create jobs and unlock private investment. She announced a Starmer government’s national wealth fund would have to secure £3 of private investment for every £1 of state funding. As I reported at the weekend, Labour has accepted that the only magic money tree is privately owned.

Another sign the party has changed.

Reeves is convinced the private sector would want to step up to the plate. She says her policy has been developed after intensive talks with company bosses, who have flocked to this conference in record numbers like bees to a honeypot; several didn’t bother to attend last week’s Tory conference.

Reeves’s fiscal rules mean Labour would borrow for investment but not for day-to-day spending on services, and that national debt would be falling as a share of the economy by the end of a five-year parliament. The biggest barrier to spending would be her debt rule. Many Labour people here at the Liverpool conference would accept a tight rein on spending for the first two years but privately express the hope Labour would then turn on the taps to improve public services and tackle inequality.

While Labour’s plan to boost housebuilding – its target is 1.5 million new homes over five years – is the quickest way to get growth, the problem is that everything would take time. So we will hear a lot about a 10-year Labour programme, over two terms, though it should be careful not to take a second one for granted.

Starmer and Reeves must perform a constant balancing act between caution and reassurance that Labour would not mess up the economy on the one hand, and change and hope on the other. Neatly, Reeves tried to offer both by arguing: “There is no hope without security.”

Labour’s cautious brigade is in the ascendancy at this conference. Reform of the “antiquated” planning system will not get them dancing a jig in the Dog and Duck. As one party insider told me: “It might be a technocratic approach and look a bit boring. But the public has had enough chaos from the Tories. They want stability.”

Reeves insisted working people would be better off under Labour but anyone watching the speech might think her only concrete example was lower energy bills if people accept a wind farm in their area. Her answer is that Labour would aim to raise business investment from 10 to 11 per cent of GDP, the level under the last Labour government. That would inject £50bn a year into the British economy by the end of the decade – £1,700 per household, though they wouldn’t actually get a cheque for it.

Reeves previewed Labour’s election campaign, asking voters whether they felt better off and Britain’s public services were better than when the Tories came to power 13 years ago. Predictable, but highly effective.

The state of those services would create huge pressure on a Labour government to throw off the self-imposed fiscal straitjacket its leaders are proud to wear now. Although Reeves wants lower taxes for working people, the reality is that overall they will be higher no matter who wins the election.