After apocalyptic election results, it may appear as if nothing is going the Conservatives’ way. But Downing Street believes the economy is an exception. This month, it hopes, will see a return to positive GDP growth (following a short recession), a further fall in inflation to the Bank of England’s 2 per cent target rate and perhaps even a cut in interest rates. The UK, Rishi Sunak and Jeremy Hunt will argue, has “turned a corner”.
Rachel Reeves’ speech in the City of London was, aides say, an attempt to pre-empt the Conservatives’ “victory lap”. In her address, which was introduced by the former Conservative minister Nick Boles (who is advising Labour), she declared that the Tories were “gaslighting the British public”.
While the numbers may suggest an improving economy, the shadow chancellor’s contention is that voters will not feel any benefits. She pointed to the 6.4 million people in England and Wales who last year saw their rent increase or had to remortgage and the 950,000 families whose mortgage deal is due to expire between now and January.
As is customary, Reeves posed Labour’s own version of the “Reagan Question”. Back in 1980, during his final presidential debate against Jimmy Carter, Reagan faced the camera and asked viewers: “Are you better off than you were four years ago?” Americans concluded that they weren’t and elected the Republican by a landslide (he carried 44 states to Carter’s six).
Labour intends to emulate this triumph: “Do you and yours feel better off than you did 14 years ago?” Reeves asked today. By this, she means more than whether living standards will be higher or lower at the end of the parliament than at the start (for the first time on record, they will be lower).
She is distilling a far wider set of concerns: “Do our hospitals, our schools and our police work better than 14 years ago?” The state of the economy, Reeves declared, was “about much more than lines on a graph. It’s about the state of our high streets, the security of work, and the money in people’s pockets.” Bankrupt councils, crumbling schools and terminally delayed trains have served to exemplify an age of private affluence and public squalor. You could call it a feel-bad factor.
The challenge that Labour faces is what it would do to change this. Reeves vowed to bring “a laser focus to bear on the barriers to economic growth”. She reaffirmed Labour’s commitment to planning reform (denouncing the current system as “a graveyard of economic ambition and a byword for political timidity”).
After recent briefings, Reeves also pledged that Labour would legislate for its New Deal for Working People in the first 100 days of the next parliament. The package was, she argued, not only “right and fair” but “good for the economy”. By granting workers basic rights, such as sick pay, parental leave and protection against unfair dismissal, from the first day of employment, Labour hopes to make them less reluctant to change jobs (one of the factors that economists say has hindered wage growth and productivity).
The challenge for Reeves given her own framing is clear: how long will it take for people to “feel” better off? (She notably refused to commit to raising income-tax thresholds when questioned).
Mindful of its economic inheritance, Labour is already deploying its own version of the argument that George Osborne deployed so effectively against the party: it will be “cleaning up the mess” left by the last government. But how sympathetic will a volatile electorate be to this argument?
Rather than merely pointing to lines on graphs, a future Labour government will need its own response to the Reagan Question. But for now, Reeves can console herself that the Conservatives have no good answer.
[See also: What is Starmerism?]
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