23 September 2024

Rachel Reeves casts herself as the anti-Osborne

The Chancellor’s speech showed how she has learned from Gordon Brown.

The charge levelled at Rachel Reeves in her opening months as Chancellor has been that she is the new George Osborne. Her rhetoric around the “economic black hole” left by the Conservatives has echoed that of her predecessor and she has become defined by a spending cut: the means-testing of winter fuel payments.

But Reeves sought to use her Labour Party conference to show that she is her own woman. Though she defended the winter fuel cut as a necessary fiscal choice, she emphasised the areas in which she has broken with Osbornomics.

While the former Conservative chancellor cut public sector pay in real terms, Reeves boasted that she had increased it (at a cost of £9.4bn). “I am proud to stand here as the first Chancellor in fourteen years to have delivered a meaningful, real pay rise to millions of public sector workers,” she declared to rapt applause (though, awkwardly, her speech coincided with nurses rejecting the government’s 5.5 per cent pay offer).

Reeves also vowed that there would be “no return to austerity”, describing Osborne’s approach as “a destructive choice for our public services – and for investment and growth too”. The test will be whether she delivers on this promise in the Budget and the Spending Review (Reeves has refused to rule out real-terms cuts to government departments). But the Chancellor has signalled she will make different choices to Osborne – not least through a far greater reliance on tax rises.

Though Reeves insisted that in-year cuts were essential to protect the UK’s fiscal position, she tried to dispel the impression that she is a mere creature of the Treasury. “It is time,” she declared, “that the Treasury moved on from just counting the costs of investments, to recognising the benefits too”. That was a rebuke to “the Treasury brain”: a monomaniacal focus on short-term savings over long-term growth. But once again, the test will be whether Reeves delivers higher public investment (which is currently due to fall from 2.4 per cent of GDP in 2024-25 to just 1.7 per cent in 2029-30).

If there was a former chancellor who Reeves echoed it wasn’t George Osborne but her hero Gordon Brown (who recently visited the Treasury). Her rhetorical refrain – “that’s the Britain we’re building” – was adapted from Brown’s famous 2009 conference peroration. Reeves, a more tribal politician than Keir Starmer, also emulated the Labour’s chancellor’s favoured dividing line: cuts vs investment. “If the Conservative Party wants a fight about who can be trusted to make the right choices for our public services and those who use them. Then I say bring it on,” she boomed, setting the terms of debate for the next election. Finally, Reeves invoked Brown’s “prudence for a purpose”, declaring: “I can see the prize on offer, if we make the right choices now”.

The Chancellor, by any measure, has one of the toughest jobs in government. In recent weeks, her political and economic judgements have been challenged from all sides. But today Reeves sought to make her task easier by reminding Labour members that she is one of them.