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25 January 2023

Rachel Reeves’ Diary: At Davos, there are two challenges – fixing the global economy, and walking in snow boots

Keir Starmer and I received a warm welcome at the World Economic Forum, despite the -14°C temperatures.

By Rachel Reeves

I headed to the World Economic Forum in Davos in mid-January, where Keir Starmer and I told the many different figures we met that with Labour in government Britain will be open for business once again. After we strapped on our snow boots and went up into the mountains – where I was trying desperately not to slip over and make a fool of myself in front of the waiting cameras – we found our message was warmly received, which certainly helped with the bone-chilling -14°C temperatures.

Our trip, filled with formal World Economic Forum events and meetings with foreign counterparts, UK business leaders and global corporations, was a stark reminder that confidence in Britain’s global leadership and our investment potential has taken a serious knock in recent years. The UK accounted for about 8 per cent of global foreign direct investment (FDI) from 1997 to 2010 – but since 2010 that has halved, to 4 per cent. Not only that, but in 2021 the UK accounted for just 1.7 per cent of world FDI, the worst result since 1990.

[See also: Jess Phillips’s Diary: Building up to power, Rishi Sunak’s healthcare, and why I would decree beards for all men]

Mission critical

Keir and I were there to talk about our Green Prosperity Plan, our mission to invest in the climate transition and in our energy security – just as a row was brewing between the US and the EU about subsidies in low-carbon industries of the future. We know one country is going to be the global leader when it comes to electric cars, renewables and the technology we need to fight climate breakdown. Why shouldn’t it be Britain?

The Conservatives are holding us back, with Grant Shapps, the Business Secretary, taking the stage at a Confederation of British Industry event to say that action in these areas is “dangerous”.

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I’ll tell him what’s dangerous: doing nothing. Labour will deliver a zero-carbon power system by 2030 and start a programme of home insulation to kit out 19 million draughty homes with the energy-efficient retrofit they need. It’s part of our plan to restore economic growth, create jobs and bring in global investment – all built on the rock of economic stability and certainty.

Windfalls of war

It’s not just opportunities that our Green Prosperity Plan will help us grasp. It will give us the tools we need to meet the greatest everyday challenge that people face: energy bills. It’s more than a year now that we’ve been talking about the cost-of-living crisis. More than a year of families and businesses watching the outlook get bleaker, of enduring constant stress with no end in sight – under a government that lacks any basic agility, competency or strength to take this on. Most of the time, it just makes the situation worse.

In January 2022 I first suggested a one-off windfall tax on energy giants to stop families suffering from soaring costs. But the Conservatives’ effort contains big tax breaks for fossil fuel investments that cancel out the government’s tax take. The enormous profits of the energy companies are windfalls of war. It is unjustifiable for them not to go towards footing the growing energy bills that families continue to face partly as a result of Russia’s invasion of Ukraine.

Beyond the quick fix

A day after I returned to London from Davos, I spoke at the Fabians’ New Year conference in London. I talked about how Labour would get rid of the holes in the Conservative government’s windfall tax, raising it to the same level as Norway to stop the price cap going up in April and to help businesses with energy bills too.

We have to move beyond sticking plasters, however. A Green Prosperity Plan won’t just help us create the jobs of the future; it will boost our energy security, meaning we’re less reliant on dictators such as Vladimir Putin. It will make bills cheaper every year, not just this year. And, crucially, it will help us curb climate change.

The crisis up close

It was an unusual week that allowed me to see both sides of how we can tackle this enormous economic challenge. I’ll soon be back to my usual schedule and up in Leeds, where my constituents continue to face the reality of that crisis.

With the government absent from the cost-of-living conversation, and mired yet again in sleaze, I know it will be left to Labour to sort out this crisis.

We’ll be ready to open up Britain for business, to get our economy growing, and to tackle the cost-of-living crisis. Those are our priorities, and it’s a message I’ll continue to shout from the hilltops.

Rachel Reeves is the shadow chancellor of the Exchequer and MP for Leeds West

[See also: Howard Jacobson’s Diary: Escaping an icy fate in the Highlands, celebrity-spotting in London, and my soft spot for the King]

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This article appears in the 25 Jan 2023 issue of the New Statesman, Why Germany doesn’t do it better