The Week

The Week 22 March 2024

Sean Eke

It was an a-Mais-ing week for fans of economic policy as Shadow Chancellor Rachel Reeves — following in the footsteps of Gordon Brown and George Osborne — delivered the annual prestigious Mais Lecture.

In the context of inflation falling to 3.4% and interest rates remaining static at 5.25% Reeves spent the best part of an hour setting out her economic vision.

Namechecking Adam Tooze, Reeves described the UK as reaching a moment of “deconvergence, trailing and falling further behind our counterparts”, exacerbated by a “new age of insecurity” with shifting geopolitical dynamics, rapid technological change and climate crisis. Unsurprisingly she criticised the Conservatives, arguing that they should have capitalised on low interest rates during the 2010s to undertake necessary investment. However, she also criticised New Labour for the narrow base upon which their economic growth was achieved.

To escape from this situation Reeves set out a “new model of economic management” based around three pillars: stability, investment and reform.

Some aspects of Reeves’ proposed model were sensible. For example, stability is certainly needed if we want to see investment and economic growth. Committing to having a single fiscal event every year is a good step towards this (even if keen readers of Reform’s snap analyses will lose out).

Furthermore, it was good to hear Reeves reiterate her commitment to a modern industrial policy — clearly influenced by the work of Mariana Mazzucato — supported by a new British Infrastructure Council and a revived Industrial Strategy Council.

Other features were more questionable, for example the proposal of a beefed-up OBR which would only permit the government of the day to change the fiscal rules if they (the OBR) declare that the UK is in an economic crisis. Reform are big fans of the OBR (with its chair, Richard Hughes, speaking at our recent Budget event), and Reeves’ analysis underpinning this point was sound: changing fiscal rules frequently does contribute to instability and uncertainty.

Nevertheless we worry that this approach could result in too much inflexibility, so that fiscal rules can only be changed when a crisis is already demonstrably underway rather than, for example, when a different approach to public spending might still stave the crisis off altogether.

Shifting from public spending to public services and it was disappointing to not hear any further details on Labour’s plans beyond “an urgent resource injection into our public services”. As noted by Reform again and again and again projections for departmental spending beyond the current Spending Review are entirely unrealistic. Serious conversations are required, rather than vague allusions to resource injections.

Beyond Reeves’ lecture, it was good to see the Public Accounts Committee publish their report on recruitment, pay and performance management in the Civil Service. As this report states, “effective government depends on having a skilled and motivated civil service”. Without good civil servants it is impossible to have good government. Look out for a Reform report later this year examining this crucial issue.

What we’ve been reading…

This week we have been spoilt for choice. Three excellent reports were published on the topics of health and social care: the Public Accounts Committee’s report on reforming adult social care, the Health and Social Care Committee’s report on the Government’s progress on meeting patient safety recommendations, and the NAO’s report on NHS England’s modelling for the Long Term Workforce Plan. As they say, you wait for a bus…

The overall picture painted by these reports is a depressing one. The DHSC is described as “not providing the leadership needed to deliver a social care sector that is sufficient to meet the country’s needs”; the Government’s progress towards meeting patient safety recommendations requires improvement; and weaknesses are found to exist in the current NHS workforce plan. Watch this space for radical new policy proposals from Reform in the coming weeks.