Rachel Reeves is no Margaret Thatcher

Patrick Blower
Patrick Blower
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Rachel Reeves, the shadow chancellor, invoked memories of 1979 in her Mais Lecture in the City. She was just a babe in arms in the year that Margaret Thatcher came to power. Older readers will remember why Labour lost. Inflation was well into double figures, much of the country’s workforce was on strike and the economy was held back by low productivity.

One of the first acts of the Thatcher government was to abolish exchange controls, among the earliest such deregulation anywhere in the world, helping to promote the City of London as a global financial centre and underscoring a commitment to free market principles.

Ms Reeves is right to emphasise the importance of pursuing policies intended to boost growth, but this is meaningless rhetoric unless accompanied by specific measures and a basic understanding of Thatcherite economics.

The 1979 moment she apparently wants to replicate involved getting the state out of swathes of industry, service provision and manufacturing through a programme of privatisation. Taxes were brought down and spending controlled. Can we expect Labour to emulate any of these policies?

The party is already committed to renationalising the railways within five years, though several lines and the track have been taken back under state control already. Pressure is growing on the Left for utilities to be publicly owned once more. This is all dressed up by Labour today as a “partnership” with the private sector, but it is in reality state interference.

The problem is that the monumental mess made by Labour in the 1960s and 1970s is so long ago that people today think it is a good thing for governments to run our lives. Moreover, the Tories are hardly making a coherent philosophical case against this trend.

The financial crisis of 2008 brought collectivist attitudes roaring back to a point where many voters now have totally unrealistic expectations of what is possible. This concept of a paternalistic state was reinforced by the Covid pandemic, epitomised by Boris Johnson promising to throw a protective arm around the nation.

Ms Reeves proposes to revive a Treasury unit focusing on growth and high productivity to feed ideas into Budgets and spending reviews. This is precisely the top-down approach that Mrs Thatcher rejected. Labour may claim her mantle but is ideologically unfit to wear it.

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