Fiscal conservative: Rachel Reeves wants to banish the idea that Labour is anti-business
Shadow Chancellor Reeves is fascinated by Labour Prime Minister Harold Wilson. When I revealed my own interest in him, she arranged for an inscribed copy of a new biography by her MP colleague Nick Thomas-Symonds to be delivered to my desk.
Wilson had great political instincts and a vision for Britain. His talk of releasing the ‘white hot heat of technology’ still resonates today. And his government fought to combat the fiscal power of the Treasury by establishing a new Department of Economic Affairs.
It sought to establish an early version of what Reeves calls ‘securonomics’, with a National Enterprise Board (NEB) ready to intervene to give Britain a technological edge. It was a key backer of what for a time was the UK’s leading-edge computing giant, ICL.
Reeves has so far failed to conjure up the rhetorical flourishes of Wilson. But it is my understanding that advisers to Reeves and Shadow Business Secretary Johnny Reynolds are developing a revised industrial strategy.
A former Bank of England official, Reeves has adopted the stern demeanour of a fiscal conservative. Her closing of ‘loopholes’ tax policies are viewed by wealth creators with horror, with North Sea oil chieftain Andrew Austin talking of the ‘devil incarnate’. But there is a seeming inevitability about a Labour victory in the autumn.
Reeves’s main goal is to banish the idea that Labour might be anti-business or profligate. Labour deputy leader Angela Rayner’s ‘New Deal for Working People’, bowing to the party’s trades union funders, is in for a detox amid disgruntlement from Rupert Soames, chairman of business lobby group the CBI, among others. A proposed ban on zero-hour contracts is set to be replaced with contracts offering a regular work pattern. Instead of full employment rights from day one in a new job, a probationary period is to be proposed.
Reeves has offered few clues as to how she will boost output, but she does see growth as key to success. She wants the Treasury to embrace a growth mission in all that it does. There will be no NEB, but the same outcomes could be achieved by a great British wealth fund that invests in home-grown tech.
Reeves and Reynolds want to revive a broader-based plan. Labour has already indicated that it wants to reshape the rail industry with a Great British Railways Company that will be responsible for timetables and improving services and infrastructure.
A critical goal of Labour’s advisers has been to give leader Sir Keir Starmer and Reeves, both of whom lack private-sector experience, as much exposure to the UK’s business leaders as possible.
Labour views some enterprises, such as the misbehaving water utilities, as natural monopolies that don’t lend themselves to much competition. Under its strategy, there will be a far greater willingness to intervene if necessary.
Another critical goal is to unlock funding to build on the UK’s tech skills. Directing pension funds will be part of this. Reeves wants a British version of the French ‘Tibi’ scheme. It will require defined contribution pension funds to invest a proportion of their assets into UK growth assets.
Restoring previous efforts to lift spending on research and development and setting more challenging goals could also be key elements of a new industrial strategy.
There will be worries in the business community that Labour will seek to achieve its goals through higher taxes. Closing loopholes and coming down hard on tax avoiders may look benign enough. But as oil drillers have indicated, they could undermine energy security, investment and enterprise.
Business people do not necessarily make the best politicians. But with Labour, the lack of entrepreneurial skills and instincts is in danger of smothering bold ambition.
