Reeves’ gropes at growth decades in the future are not good enough
The benefits of Rachel Reeves’ plans for new reservoirs and airports won’t be realised quickly enough. It exposes this government’s lack of coherence, credibility and, crucially, urgency, says Brandon Lewis
Since coming into power, Labour has repeatedly attempted to position itself as the energetic party for economic growth, capable of shocking a lagging system to reach new heights. But last week, the Chancellor of the Exchequer’s announcement was far from the electric economic thinking needed to revive a faltering system. Rather, it exposed the new government’s fundamental weaknesses: a lack of coherence, credibility and crucially, urgency.
To many, Chancellor Reeves’ announcements felt like a random list of items pilfered from the scrap heap of discarded policy options, all covered in dust, rusting and of dubious reliability. The utter lack of coherence in the plans announced – from airports to reservoirs to stadiums revamps and the long discussed Oxford-Cambridge Arc, undergirded the lack of a coherent economic planning and made the event feel reactive and rushed; a response to business anxiety over the UK’s quickly dulling economic outlook.
Reeves’s pitch also smacked of the jejune overconfidence of a government long out of power. Labour, she argued, in being new and bright and in dogged pursuit of change, will be able to deliver on projects that have stymied other governments for decades.
Despite promising to go “further and faster” the Chancellor has picked projects which are already mired in intra-party dissatisfaction and, on top of that, will take decades to complete
Despite promising to go “further and faster” the Chancellor has picked projects which are already mired in intra-party dissatisfaction and, on top of that, will take decades to complete. Discussions to expand Heathrow have filtered through the policy ether since 2007 but will take another 25 years to complete. Just hours after the Chancellor’s announcement committing the government to having a third-runway built, London mayor Sadiq Khan was on the airwaves full of bluster and threat, vowing to stand in its way. Even if Labour are successful, the immediate economic momentum so desperately needed in this country will not be solved by long-term, moonshot projects.
While Labour has encouraged plenty of engagement through roundtables and consultations, they have failed to condense those conversations about fostering fresh approaches into actionable policies. Talk of tweaking the non-dom status would bring some capital back to UK shores but that’s not enough. We hear time and again, from Riyadh, to Dubai, to New York and Singapore, that there is little international appetite to invest in the UK.
Labour has made it harder for businesses to thrive
Since June, Labour has made it harder for businesses to thrive. Increases to National Insurance have raised the cost of hiring, while the government’s uncompetitive tax regime discourages investment. Businesses hear Labour’s rhetoric about fostering growth, but are burdened by policies that seem to work against that very goal. If Labour is serious about revitalising the economy, they should consider reducing employment and corporate taxes while pursuing targeted restructuring incentives for key growth sectors like construction, technology and finance.
Rather than drag us all into the pursuit of sluggish megaprojects, Labour ought to focus on practical, high-impact reforms. Tax relief for growth industries like construction, technology and finance would spur job creation and economic dynamism that attracts foreign investment. While increased incentives for R&D in the technology sector would provide smaller firms and start-ups with a framework for agile innovation and scaling.
Each Chancellor wants to be a driver of grand change and leave his or her mark on history, but the country needs an urgent alteration to its economic trajectory, not an aspirational pledge of economic growth decades down the line.
Brandon Lewis is a former minister and Conservative party chairman