The biggest news from Rachel Reeves at Labour’s annual conference was just after her speech. As many in the Liverpool convention centre began heading for the exits, the former Bank of England governor Mark Carney publicly backed the shadow chancellor. “It is beyond time we put her energy and ideas into action,” he said in a pre-recorded video. From a man once chased halfway around the world by George Osborne when he was Tory chancellor – for the signal the “rock star” economist’s appointment as governor would send about Britain’s economic clout – it was a big coup for Labour. Reeves’ message was about how far Labour has travelled on the road to electability as a government in waiting: “Ready to serve, ready to lead, and ready to rebuild Britain.” If Carney agreed, might not others? Economic credibility has been the Labour party’s achilles heel since the 2008 financial crisis. Yet with Reeves herself being a former Bank of England economist, her endorsement from Carney, and the British economy in turmoil after 13 years of Tory government, fiscal competence is a battle she is ready for.
The recurring theme of her speech was of a country in crumbling shape; ripe for rebuilding by a competent government after years of political instability, decline and drift. Oddly enough it is a similar picture to the one drawn by Rishi Sunak in Manchester a week earlier. Reeves, however, sought to draw sharp contrast by arguing the prime minister’s axing of HS2 north of Birmingham showed the Tories were “blockers” not builders, who, when they did spend public money, did so wastefully. In a pitch to become an iron chancellor, exercising tight restraint on the national finances, she cantered through a list of well-trailed policy announcements designed to highlight Tory incompetence: sticking to fiscal rules, an inquiry into HS2 costs, limits on ministers using private jets, a Covid corruption commissioner. Painting the Tories as profligate squanderers after the austerity years would have once been a tough job. Yet after the unfunded tax cuts promised in Liz Truss’s mini-budget, and the largesse of some pandemic-era PPE contracts – including for Tory contacts – Reeves’ job was much easier. Should Labour win the next election, as the opinion polls suggest, Reeves indicated the party would take a distinctly nationalist approach. “Globalisation as we once knew it is dead,” she declared. It is perhaps an unusual comment for someone endorsed by Carney, viewed on the right of politics as an “arch globalist” for his opposition to Brexit. Yet also a sign of the times. Reeves reprised her message of “securonomics” from a speech she gave in Washington earlier this year – promoting strong public services to give households and businesses a platform for growth, while also requiring local production of key resources to provide national economic resilience. Joe Biden has taken a similar approach in the US, aiming to build up the world’s largest economy with investment in green jobs and industries. “We must rebuild our ability to build, make and sell things here in Britain,” she said, while reusing the US president’s slogan “growth from the bottom up and the middle out” to argue that this would help to close inequalities between UK regions. It is, however, a delicate pitch to make. In arguing that the British economy has been left a smouldering wreck by the Conservatives, and requires rebuilding, doing so on a tight budget could prove tricky. After the speech Tories were quick to highlight that Reeves failed to mention the pledge to borrow £28bn for investing in green jobs and industry. Insiders say this was not deliberate. But herein lies a tension between fiscal restraint and rebooting the economy. However, when both parties agree Britain’s economy is not working as it should, Reeves, with backing from Carney, arguably has the upper hand. At previous elections Labour has had little success in fighting the Tories on economic grounds. This time could be different.