Rachel Reeves won’t reverse – but she might try a tricky three-point turn
When the chancellor delivers her landmark speech this week – explaining how jettisoning planning red tape and greenlighting a third runway at Heathrow will shake off Britain’s economic gloom – she will attempt to wriggle free from the tight corner she got herself into, says Chris Blackhurst
Suddenly, Rachel Reeves is everywhere. There’s no stopping this 2.0 version of the chancellor.
She was all for making savings and plugging the famous “black hole” left by the Tories. Growth received a mention but, crucially, no detail. Now, Reeves is about expanding the economy, reaching out to business, winning its confidence, making Britain “internationally competitive”.
In her landmark speech on Wednesday, she is expected to unveil a bonfire of planning rules to get Britain building again, and announce a third runway at Heathrow airport as well as expansion at Gatwick and Luton. After the gloomy Budget, the messaging will be relentlessly upbeat of the “Just Do It”, “Yes We Can” variety.
Remarkable, what the sight of Donald Trump galvanising investors and the markets can achieve. That, plus the realisation that Britain was sinking fast.
While the new US president was putting a rocket under America’s boardrooms, here the newish prime minister and his financial lieutenant were doing their level best to send the British equivalent crashing back down to Earth.
The mood, especially when set against a backdrop of dismal figures, with the one glimmer in better-than-expected inflation, could not be ignored.
So, Reeves, unlike another famous woman politician, is for turning.
Her crackdown on non-doms is to be less severe. That ignores the fact that she put down a marker and showed what she and her boss, Keir Starmer, really think of wealthy foreigners coming to live in the UK.
In the duo’s eyes, they were getting away with paying little tax – never mind that they brought investment and jobs – so Labour would hit their worldwide earnings. That remains, and that is what’s causing such annoyance and driving them away or persuading them not to come.
They got the message, even before Reeves delivered her Budget. VAT on school fees, removing the winter fuel allowance for pensioners, not on benefits… these were trailed as soon as Starmer got into power. Those, plus the need to fill that Tory fiscal chasm.
Her speech, confirming those measures and adding more, like targeting farmers for inheritance tax and whacking up employers’ national insurance, showed the direction Labour wished to pursue.
The trade unions and the left were satisfied; the actual creators of wealth were not. Suddenly, the language, the mood have become conciliatory and appreciative.
It’s as if Starmer and Reeves have undergone a Damascene conversion, realising that ours is a joined-up world, that globalisation really is a thing, that we operate in a ferociously competitive space.
Businesses and financiers do not have to base themselves in the UK, not anymore. They can be anywhere and they can choose governments and places that say they want them and mean it.
An expanded Heathrow, removal of planning laws and burdensome red tape are back on the agenda. Regulators have been “hauled in” to meet Reeves and asked how they are going to switch away from a risk-averse culture to boosting the economy. It looks good and sounds good, but it’s not going to make a difference – not now, when it is most urgently required.
A new runway for Heathrow and a larger Luton and Gatwick will take years to materialise, even with Reeves’ promise to remove the obstacles in their path. As for suffocating rules, we’ve been here so often in the past that the pledge rings hollow.
Previous governments, not just Labour, have made the same boast and still, the codes and laws pile up. Likewise, watchdogs. A structure and way of doing things that was geared towards safety-first will take some dismantling. It will not occur overnight.
That’s the problem. What Britain will be like a decade hence, even if these and other initiatives are achieved, is not the pressing issue; it’s today and the global business environment that is perpetually spinning and increasing its speed all the time, and judging.
Reeves can’t slam into reverse; she’s got a public purse to try and fill. Besides, her political base would not let her.
So, she’s resigned to attempting a three-point turn in a tight squeeze. She caused the difficulty by parking there in the first place; extracting herself may prove impossible.
Meanwhile, the CCTV cameras, in the shape of the international investment community, are watching, unimpressed.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
6Comments