One of Rachel Reeves’s colleagues texted her the other day, asking for advice before a big interview. She wanted tips on how to deal with a broadcaster who had rather obviously annoyed the shadow chancellor by trying to patronise her about economics. “Just remember we’re doing these jobs because we’ve worked really hard and fought for this,” Reeves told her fellow Labour frontbencher. “We weren’t born with a silver spoon in our mouths … I’ve spent my whole life trying to prove myself and to show I’m as good as any private school person.” This theme is never far from the lips of the self-proclaimed “girly swot” from a south London comprehensive who spent much of her teenage years beating posh boys at chess. When we meet at a cafe for a campaign pit-stop in Gloucester, she chooses a cup of Earl Grey tea and declines the offer to share my white-iced bun. An hour or so earlier, she had visited a Morrisons supermarket in Swindon with Keir Starmer. These are the kind of hardscrabble and usually Tory-voting towns in southern England that I remember all too well visiting a decade earlier when I was working for Ed Miliband and Labour failed to convince voters it was up to the task of government. With the throaty laugh that will probably become a bit of a trademark in the years ahead, Reeves says she is a bit “scrappy”. It’s a trait she shares not only with the party’s son-of-a-toolmaker leader who says he’s always had to silence that voice inside telling him he “doesn’t belong here”, but also the working-class core of the shadow cabinet including Angela Rayner, Pat McFadden, Wes Streeting and Bridget Phillipson. “We’ve got to prove ourselves over and over again,” says Reeves. But the point they all need to prove – and the immediate problem she will have to overcome if she steps over the threshold at the Treasury in less than a fortnight’s time – is of the elephant-sized variety.
Independent economists, led by the redoubtable Paul Johnson at the Institute for Fiscal Studies, accuse both main parties in this election of being engaged in a “conspiracy of silence” over the need for tens of billions of pounds in tax rises or spending reductions. The government, with the kind of scorched earth tactics more usually associated with retreating armies, has programmed in £20bn worth of public service cuts over the next two years while driving up national debt levels so high that any extra borrowing would break Reeves’s ferrous fiscal rules. It’s why there have been so many headlines about Labour’s “secret tax plan” even as the left warns about an imminent a return to austerity. Reeves, wary of repeating the mistakes of Liz Truss and Kwasi Kwarteng two years ago, is careful not to criticise economic orthodoxy. “They’re right to point out that the scale of challenges facing an incoming a Labour government will be immense,” she says. “If I didn’t admit that, people would just go, ‘she doesn’t have clue’, wouldn’t they?” She merely asks why much of the media “just seem to shrug” and fail to scrutinise Conservative promises that “don’t add up”. But no one, including Tory ministers themselves, really expects them to get the chance to implement such plans. In these circumstances, it’s not unfair to highlight how Reeves has left a little wriggle room for tax increases by refusing to rule out hikes in limited areas such as capital gains or inheritance tax by saying only she can’t be expected to “write the next five budgets now”. Her obvious frustration is perhaps more justified over not being taken seriously when she says the need for tax rises or big spending cuts can be avoided by growing Treasury revenues alongside the economy. The bold ambition to secure the “highest sustained growth in the G7” is the “primary mission” of the next Labour government, and the central theme of the party manifesto, and the subject that dominates her preparations for power.
“It can’t just be about tax and spend,” she says. “For the last 14 years, there has hardly been any real growth so that the focus has been on tax and spending, one fiscal event after another, and whether they can pull a rabbit out of the hat. The Treasury has an enterprise and growth unit that’s been degraded. There have been too many gimmicks, not enough growth. It’s hard to get people out of that mindset.” By now, Reeves is talking very quickly as if to emphasise the urgency. She rattles through her three categories – “stability, investment and reform” – of ways to get economic growth. She talks of having a “big bang” moment in the first 100 days of a new government. “Much of this won’t take as long as people think,” she says, “reform is something we can crack on with straight away.”
She lists measures such as updating lists of nationally significant infrastructure to include onshore windfarms and new datacentres, setting housing targets “so local authorities can get on with building homes”, the consolidation of pensions to free up long-term investment and a new regime on skills. She is expected to convene a “global investment summit” this summer followed by a budget in the autumn. Nor will it “take ages” to establish the stable economic framework that she’s been told by the world’s biggest capitalists is the condition for putting their money into the UK. “I’ll fulfil my side of the bargain,” she says. There’s even a slight glint in the shadow chancellor’s her eyes when I suggest that Britain, led by the stolidly sensible Starmer and buried in the technical detail of planning reform, might seem a haven of calm when compared to countries such as France and the US whose imminent elections could trigger another storm of destructive populism. Reeves says investors have been put off the UK amid the high turnover of Tory prime ministers and chancellors. “I really hope other countries don’t go down the same route, but I want Britain to be a safe place to invest and a country of which we can be proud again. That means sound finances, respect for institutions and the rule of law with the kind of seriousness of leadership we haven’t had for a number of years now,” she says.
Although she recognises that Brexit has made it “harder to trade with our closest economic partners” and “that hasn’t been good for growth”, she won’t go beyond a limited number of examples for mitigating some of the of the damage, with new agreements on veterinary standards, recognition of professional qualifications or lower travel restrictions for cultural industries. Labour’s reluctance to go further by entertaining the prospect of rejoining the single market or customs union is one reason so many otherwise sympathetic economists worry that her reach for sustained faster growth may exceed her grasp. Her best answer, for now, comes back to that scrappy relentlessness of Labour’s team. “We are seeking a mandate to grow the economy,” she says. “We are determined to it. We’re prepared for tough decisions.” They want to defy conventional wisdom and do better than everyone expects. “They were wrong when they told Keir Starmer he couldn’t change the Labour party,” she says. “We’ll prove them wrong again.”