QThe mythology of political history insists that politicians’ speeches matter. A lifetime of political journalism tells me otherwise. Political speeches must be made, and some politicians are good at them – Michael Heseltine, the best I’ve ever heard – but most speeches are events of the moment. They are decorative, not determinative. Most are insignificant and rightfully forgotten, even the good ones.
There are, however, occasional exceptions. Rachel Reeves’ talk at the Peterson Institute in Washington DC on Wednesday has a claim to one of those with a longer shelf life. Not because it’s an oratorical tour de force laced with smart lines. It’s not. Some of Reeves’ terminology, such as his embrace of what he calls “securonomics”, is a stumbling block to understanding what is an important idea. But that is a minor point. This speech is very important. It is important because the ideas and commitments it contains are serious – and because it deals with something that is indisputably important.
It refers to the long-term deterioration of the British economy, which is now highlighted by Brexit. Inflation may have eased to 8.7%, but it was still higher than expected – and food, services and core inflation all continued to grow. Interest rates may rise again and probably won’t fall anytime soon. Britain’s economy is walking wounded. The cost of the livelihood crisis remains severe for millions. Optimism is in short supply.
Reeves’ speech was in part a national response to the need to put that right. But it is also about Labour’s familiar need to prove to voters that it is economically reliable. Unsurprisingly, support for the Tories as the best party for the economy has eroded. But Labour’s economic confidence, although higher than the Tories, remains low. The issue is Labour’s achilles heel. With an election now possibly less than a year away, the shadow chancellor needs to make a seriously big pitch. Hence the journey to New York and Washington DC for his keynote speech.
That speech, which also marked the publication of a Working Paper entitled A New Business Model for Britain, pays good reading. It did so because it contained a structured – and, crucially, innovative – argument about the British economy. As such, it outlines Labour’s direction of travel on the dominant issue facing Britain today, and one on which the future government of Keir Starmer will ultimately be judged by voters. Such is the depth of political distrust today, it is tempting to say that it makes an argument on which the future of credible democratic government of any kind in Britain may stand or fall. That’s how important it is.
At the heart of the shadow chancellor’s argument are four key principles. The first is that the rules of the global economy have changed due to repeated shocks since 2008. The second is that the government should be more proactive in order to build the economic order that is so obviously under threat. from shocks. The third is that liberal economies must work together to do this, not against each other. And the fourth is that all this must happen within effective national fiscal rules – and not by allowing the debt to grow.
Amidst the economic and political upheavals of the past seven years, this seems like a return to health. Some of the building blocks proposed by Reeves may have been hinted at at times during the Conservative years, such as when Theresa May argued for a more active government, for example. But they remain words not deeds, not least under Rishi Sunak, who is opposed to the idea of industrial strategy.
But what Reeves is promoting now is definitely not a return to the past. His long-term goal is to restore economic growth in the UK. But Reeves’ approach is a world away from Liz Truss’ slash-and-burn dash for growth. It would also push a Labor government into a very different place from that adopted after 1997 by New Labour. In some ways this is more New Deal than New Jobs, and the whole project owes a lot to the Joe Biden administration in Washington and the government-led investment that marks Bidenomics.
In Reeves’ strategy, the state has a more dominant role and does not leave the decision-making territory to banks and businesses. An industrial strategy – focused above all on the green investment programme, worth £140bn over five years – dares to say its name again for the first time since the 1970s. And supply chains will be made more secure, even protectionist in some respects, by reducing dependence on China, and by a more proactive, pragmatic alignment with Europe.
Reeves is traditional in a sense. He is trying to carve a middle path between free-market globalism and state control of the economy. This is something that every social democratic party in western Europe has tried to do, despite different national traditions and with changing shibboleths, since the 1950s. His is a 2020 version, and although it owes a lot to the US Democrats, it also has things in common with the German SPD program. To dismiss all this as Blairite is a disservice.
A week later, the New Statesman called Reeves the most influential person in progressive British politics today, with Starmer relegated to second place. His speech in Washington DC emphasized that case. If nothing else, this is the most important answer Labor has offered to those who say they don’t know what the party stands for now.
