That’s not to say that parts weren’t interesting. Earlier this week Roger Bootle of Capital Economics published a fascinating paper for Policy Exchange about pro-growth economic transformations in Thatcher’s Britain, postwar Germany and France, post-communist Poland, free-market Hong Kong, Singapore, South Korea and Ireland. Interestingly, Reeves articulated some similar conclusions about the transferable lessons for Britain.
Bootle found that transformative governments usually had a growth strategy but not detailed plans, nor did they chase a policy “silver bullet”. Fiscal prudence is necessary but not sufficient for growth, while keeping inflation under control helps. Reeves’s commitment to low inflation and balanced day-to-day government budgets, while humbly acknowledging that not all growth problems can be solved by Westminster, is therefore encouraging.
She correctly identified too that “the solution [for stronger growth] lies in wide-ranging supply-side reform”. Planning, she explained, was the “single greatest obstacle to our economic success”, making it too slow, expensive, and sometimes impossible to build housing, physical or digital infrastructure, and transport where it was desperately needed. Unpicking this knot would drive private investment, increase productivity, and generate higher wages.
So far, so good. Yet Reeves’s speech highlighted two reasons why I worry Labour won’t deliver on its growth promise. First, attaining stronger growth requires prioritising it, but Reeves often signals the progressive conceit that all good things can go together. Alongside high growth she committed to decarbonisation, reducing gender and regional inequality, and helping families to feel more secure. When these aims conflict with growth, will growth remain her lodestar?
Labour’s reluctance to acknowledge certain trade-offs suggests not. Reeves proposes extending the Bank of England’s remit to include climate policy, a move that risks diluting its focus on inflation. She implies that decarbonisation will deliver all of “improved resilience, lower energy costs, [and] jobs and growth from new technologies”. Similarly, she sees no disconnect between enhancing job security and the inherently disruptive nature of a dynamic, growing economy reshaping industries and destroying defunct jobs.
As importantly, I heard no evidence that Labour had a real strategy to deal with the powerful NGOs, environmentalists, homeowners, and nimbys who could stymie planning reforms. The Conservatives couldn’t overhaul these regulations, remember, even with a stonking majority. Reeves put this down to “political timidity” and “short-termism”, implying that political will is what’s needed. This is naive.
Labour’s mooted ideas for regional planning, mandatory housing targets and green belt development have been tried and failed. The party must understand why and think seriously about obtaining consent for specific reforms in an election, or have plans ready to buy off opponents. I’m sure Lawson would tell Reeves that economic transformation requires not only new policies, but pragmatism in overcoming entrenched interests and making unpopular choices.