Yesterday’s Spending Review was important in all kinds of ways. It was important because it sets the direction for the next couple of years of spending, aiming to provide the stability that businesses and the country have been lacking. It was important because it marks the start of the major capital investment programme Britain needs to shake off our longstanding low productivity – low growth spiral. And it was important because it found space to protect and even enhance key public services like the police and NHS.
There are also caveats to all of these moves. Day to day budgets across departments are being squeezed. Heroic Whitehall efficiency assumptions underlie the assumptions that keep this within the fiscal rule. And council tax (the UKs last regressive tax according to the IFS) looks likely to rise across the country.
Whether all her measures will have the impact the Chancellor hopes, only time will tell. But for those of us who are interested in the shape and direction of this government, perhaps the most important thing is that it feels like Rachel Reeves herself is back.
Slogans than had either taken a back seat or vanished entirely returned in the Chancellors Statement. Buy Make and Sell in Britain, and Securonomics being the two notables.
These were foundations of Labour’s economic pitch pre-election. Securonomics, originally derived from ‘Bidenomics’ before that fell out of favour for relatively obvious reasons, was set out – at length – in Reeve’s Mais Lecture last March.
In it, she spoke of three foundations of her vision of British economic governance: stability, investment, and reform – all of which are visible in this Spending Review. The thing itself, bringing them back to being regular events, setting long timelines, offering multi-year settlements and investments speak to stability. Investment is the central plank of this SR with money shifted from day-to-day to capital spending – to the particular benefit of the green and defence industries. And reform, well in some senses the chancellor has bet the farm on reform – not just in Whitehall but in the NHS too – to avoid breaking her own iron clad fiscal rule.
And in stressing that this was a Labour Spending Review, delivering on the people’s priorities the Chancellor is returning once again to her clearly stated view that the economic is political and vice versa. As she says in that Mais lecture:
“… a new model of economic management is needed. Because a model based on the pursuit of narrow-based, narrowly-shared growth – with ever-diminishing returns – cannot produce adequate returns in growth and living standards, and nor can it command democratic consent.”
Securonomics, to the extent that people talk about it at all today, seems to have come to mean something adjacent to defence. More sophisticated observers might also bung in ‘friend-shoring’, the practice of trying to cut hostile or ambivalent states out of our supply chains (important but harder than it looks. We are keen to give the Chinese their mega embassy and just four EU countries bought more than €6bn worth of Russian gas last year…).
But the original vision was about much more than this. It was about security for people from the various predations and shocks of the modern economy more generally. So yes, this was about insulation from geopolitical risk which raised prices and risks employment. But also the insecurity of modern working conditions, with Reeves calling our the “one sided flexibility” that favours employers and leave workers insecure:
“flexibility is too often manifested as insecurity, corrosive of individuals’ physical and mental health, their ability to plan ahead, and the time they are able to spend with loved ones.”
This is of course, is being addressed by the employment rights bill which maybe for reasons of political convenience and is being more associated with Angela Rayner than the Chancellor.
And perhaps it is the responsibilities of being Chancellor that have made it hard for Reeves to keep advancing the vision set out it in the Mais lecture up till now. Labour promised a government that was pro-business and pro-worker.
Businesses I speak to are confused about when the pro-business bit will begin. They are deeply worried about the employment rights bill. They want and expect economic boosterism from a chancellor who we can see from her previous thinking has a serious diagnosis of, and a plan for, the malaise in the British economy – and how it impacts society.
Perhaps figuring out how to navigate the tension in all this is the reason ‘Reevesism’ or ‘Securonomics’ has taken a backseat since the election. But the Spending Review is evidence that there is life in this agenda yet. What needs to happen now is a hammering of the message that we can be pro-business and pro-worker, that we really are all in it together – ‘it’ being the shared project of UK prosperity, and an explanation of both the pain that must be borne and reasons why. All of this is extant in Reeves previous work. It’s time to find it again.
