Why Rachel Reeves says she'll be the iron chancellor

Rachel Reeves evoked Margaret Thatcher during her Labour Party conference speech and was met with a standing ovation, ITV News Political Correspondent Shehab Khan reports

It was a moment that presumably prompted Gordon Brown, Chancellor Prudence himself, to shed a tiny tear of joy: Labour members gathered in the vast Liverpool conference hall applauding as the current shadow chancellor Rachel Reeves said a Labour government would exercise "iron discipline" in controlling the public finances.

Her self-defining political noun is "iron" rather than his "prudence". And if this reminds you more of a blue prime minister, rather than her red predecessors, that's probably no coincidence. There were a ton of phrases and metaphors redolent of Margaret Thatcher.

Here are a couple:

  • "When you play fast and loose with public finances, you put at risk family finances."

  • "Taxpayers' money should be spent with the same care with which we spend our own money. I remember my mum would sit at the kitchen table, checking her receipts against her bank statements...With my mum every penny mattered."

You'll recall that just over a year ago, Liz Truss - when campaigning successfully to be Tory leader and PM - was accused of dressing and sounding like Thatcher, of engaging in so-called Thatcher cosplay.

As prime minister, Truss notoriously ignored Thatcher's first fiscal rule, namely that it's reckless to cut taxes unless you first put the public finances on a sound footing.

Reeves' speech can perhaps be seen as an exposition of that first Thatcherite rule.

Remarkably, a left-of-centre audience stood, whooped and cheered at the absence of any significant new public spending commitments or tax cuts.

This was not hairshirt fiscal discipline for its own masochistic sake, Reeves would say. She makes a case similar to that of the current Tory chancellor, Jeremy Hunt, namely that business investment and growth in national income require financial and economic stability. They both claim to be the antidote to the failed Truss experiment.

That said, stability is necessary though not sufficient for growth. And in the absence of a promised budget stimulus, all her growth-friendly measures are what's called supply-side reforms.

They include:

  • Speeding up planning for housing and infrastructure, especially pylons and power cables

  • Replacing business rates with a new system that loads more of the burden on to digital retailers

  • A target to increase business investment back to the kind of proportionate levels enjoyed by competitor countries, though with precious little detail about how to get there

  • A war on waste in government, including the pursuit of crooked businesses that ripped off the Treasury's Covid support

  • Re-doubled efforts to close the gender pay gap

  • Ending non-dom tax breaks for foreigners who live in the UK

  • A shared characteristic of all these initiatives is that any positive effect they may have on growth and prosperity - and therefore on tax revenues that are required for improving public services - will be years in the making.

Reeves with Labour leader Sir Keir Starmer at the party conference. Credit: PA

Her argument is that an immediate stimulus is too risky, too destabilising.

By implication, she accepts Hunt's case that the priority is to curb inflation and strengthen the government's balance sheet.

It is by implication though. As Hunt points out, in a post-speech attack on her, she never once actually said the word "inflation".

This might hurt her if she hadn't pledged to write a "Charter for Budget Responsibility" and to strengthen the powers of the Office for Budget Responsibility (OBR) - the tax-and-spending watchdog created by George Osborne - to assess all and every "permanent tax and spending changes".

When she talks about the importance of stability, she takes the imperative of maintaining price stability - of delivering low inflation - as read.

It's not that she forgot its importance when writing her speech, but that she regards its importance as mind-numbingly obvious, in some contrast to Hunt's and Sunak's immediate predecessors.

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