Support 110 years of independent journalism.

  1. Long reads
7 June 2023

The Reeves doctrine: Labour’s plan for power

She is ready to be Britain’s first female chancellor. But will Rachel Reeves’ caution stifle her creativity?

By Jason Cowley

The American dream

In May I accompanied Rachel Reeves on a trip to Washington DC, where she met senior Democrats, notably Janet Yellen, the first female US treasury secretary, whom she saw at the White House complex, and made a big economic statement. In a conference speech in 2005, Tony Blair said, “I hear people say we have to stop and debate globalisation. You might as well debate whether autumn should follow summer.”

Four years after the 9/11 attacks and two after the American-led invasion of Iraq, Blair’s liberal triumphalism remained boundless. These are different, darker times. Chastened by the rise and increasingly assertive power of China, by the pandemic and Putin’s war in Ukraine, as well as entrenched spatial and economic inequalities in Britain, Reeves, urged on by close associates, wanted to do more than simply debate globalisation. She wanted to declare its death. Or at least the death of globalisation “as we know it” (a qualification insisted on by her closest advisers), which she did in a short, sharp speech delivered at a breakfast gathering at the Peterson Institute in Dupont Circle. Her comments were received in the room with polite scepticism as guests ate pastries and drank coffee and bottled water.

Two days before, on a bright, breezy morning, we took a ferry ride back from Governors Island in New York Harbor, where Reeves had visited a school and inspected environmental projects. She reflected on why the British economy had yet to recover from the Covid shocks, unlike the US economy, which was more than five percentage points bigger than at the onset of the pandemic. Why had Britain been left so vulnerable and exposed? “The old model – of the fastest, the cheapest, not mattering about who owns things – has passed,” she told me. Britain was in a “global race” but “still at the starting line arguing about the rules. We need to get with the new emerging global consensus about the role of the government, working in partnership with business to build security. Where we get our semi-conductors and our energy from really does matter. That’s the new reality because of the threats we face.”

[See also: Labour and the return of the state]

I’d heard her say something like this before. In a New Statesman essay, “Our search for a national story”, in March 2021, she wrote: “No other Western country has allowed so many of its strategic assets, great companies and public services to be captured by overseas interest.”

Select and enter your email address Your weekly guide to the best writing on ideas, politics, books and culture every Saturday - from the New Statesman. The New Statesman's quick and essential guide to the news and politics of the day. Stay up to date with NS events, subscription offers & updates.
  • Administration / Office
  • Arts and Culture
  • Board Member
  • Business / Corporate Services
  • Client / Customer Services
  • Communications
  • Construction, Works, Engineering
  • Education, Curriculum and Teaching
  • Environment, Conservation and NRM
  • Facility / Grounds Management and Maintenance
  • Finance Management
  • Health - Medical and Nursing Management
  • HR, Training and Organisational Development
  • Information and Communications Technology
  • Information Services, Statistics, Records, Archives
  • Infrastructure Management - Transport, Utilities
  • Legal Officers and Practitioners
  • Librarians and Library Management
  • Management
  • Marketing
  • OH&S, Risk Management
  • Operations Management
  • Planning, Policy, Strategy
  • Printing, Design, Publishing, Web
  • Projects, Programs and Advisors
  • Property, Assets and Fleet Management
  • Public Relations and Media
  • Purchasing and Procurement
  • Quality Management
  • Science and Technical Research and Development
  • Security and Law Enforcement
  • Service Delivery
  • Sport and Recreation
  • Travel, Accommodation, Tourism
  • Wellbeing, Community / Social Services
Visit our privacy Policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.

More seriously and fundamentally than any other senior Labour politician, Reeves grasps that the world has entered a new era of geopolitical competition and economic nationalism – or even geopolitical tragedy. In this New Tragic Age – where trusted alliances will matter more than ever – the role of the state is not only to build national resilience but to protect us from insecurity and disorder.

During our conversations Reeves ruled out a lot. She said a Labour government would not introduce annual wealth and land taxes; raise income tax; equalise capital gains rates and income tax (something the late Nigel Lawson did as chancellor); rejoin the European single market and customs union; change the Bank of England’s inflation target and reform its rigid mandate; or take private utilities into public ownership, except for the railways. What, then, would Labour do to assert its radical credentials? What is the scale of its ambitions? How do they compare to the postwar Attlee settlement, say, or Harold Wilson’s modernising reforms of the 1960s?

Content from our partners
Setting the stage for action on climate finance
Drowning in legacy tech: the move to sustainable computing – with Chrome Enterprise
Can our sluggish education system survive in a fast-changing world?

Reeves smiled at the mention of Attlee. “Wilson spoke about the white heat of technology,” she said. “But, in a way, this is about the green heat of the technology of the future and the industries of the future.” She added: “We need to build our own resilience, security and strength.”

Confidence and supply

This was a rehearsal for her speech in Washington, as it turned out. Reeves is convinced that the era of economic multilateralism has ended. A new, more state-directed, more protectionist (not a word she likes) Washington consensus was replacing the old Washington consensus, the so-called neoliberal order, with the Biden administration – through the Inflation Reduction Act (IRA), which incentivises investment in green technology and domestic energy production – in the vanguard. For Reeves, economic policy must be driven by the imperative for security. She calls her response to the defining challenges of our times modern supply-side economics – or “securonomics”. (The neologism is not a speechwriter’s but her own coinage.)

“Securonomics” – “modernised Blue Labour”, one insider called it with a smile – is characterised by active industrial policy, more resilient supply chains and a strategic state powering a nation’s productive capacity – what the Harvard economist Dani Rodrik calls “productivism”. In a pamphlet, “A New Business Model for Britain”, Reeves writes: “[We must] use all the powers of the government to buy, make and sell more in Britain… This marks a change from the wisdom of years gone by. The era of hyper-globalisation, where an international free market reigned and nation states stood back, is dead.”

Reeves had come to Washington not only to introduce herself to Yellen and other financial and economic power brokers – she also met Lael Brainard, head of Joe Biden’s National Economic Council, and Gita Gopinath, number two at the IMF: “three fantastic women shaping politics in Washington today” – but because she was seeking validation for her ideas. She was eager to be photographed against the Manhattan skyline, at the New York Stock Exchange on Wall Street and outside the Capitol, centres of American capitalism and power. This was deliberate self-positioning: look, here I am, and I belong.

Her team are keen to build her self-confidence. “Like many politicians from working-class backgrounds she has class insecurities,” one friend said. “She doesn’t have the ease and confidence of someone like Boris Johnson. He’s been playing this game forever; he’s comfortable in his class. He seems authentic because he is authentic: he thinks he has a right to rule. Rachel still feels as if she has to play a part – the part of being chancellor.”

Reeves agreed that coming to the US had boosted her confidence as well as strengthening her conviction. “Speaking to some of the people first-hand who have devised these policies and are putting them into practice gives me inspiration,” she said of what is being called Bidenomics. “It also gives me confidence that the ideas that I’m talking about and the policies I want to pursue as chancellor are the right ones.”

This is candid. It also recognises both Labour’s inherent lack of confidence – Reeves was working on ideas on national resilience before she became shadow chancellor and Biden became president, and could have given a speech as an equal to the Americans – and its belief that power is finally within its grasp after four traumatic general election defeats. The party is seeking like-minded allies as the international order fragments, and believes it has found them in Biden’s America, as well as in Germany and Australia, states where moderate social democrats are back in power.

Photo by Greg Kahn

“Labour’s economic argument is crystallising,” says Josh Simons, director of Labour Together, the group set up in 2015 to address the party’s political crisis. “Under Rachel’s economic leadership, Labour has joined centre-left parties around the world who are willing to think about economics and use the state to make their nations more secure and resilient: the US Democrats, Australian Labor Party, and German Social Democrats. So far, the trend is those parties win elections.”

But there is a problem: Donald Trump. A Trump presidency would upend and destabilise the Western alliance, especially on Putin’s Russia, if not also on China – Biden has softened but consolidated Trump’s China-scepticism. “We want President Biden to secure a second term and for the ideas that they’re pursuing to be continued,” Reeves told me. “But whatever happens in the US, it is in our interests, in the UK’s interests, to build the security of family finances but also to build the security of the national economy.”

Reeves was impressed but also alarmed by a recent speech by Jake Sullivan, the US national security adviser, on renewing American economic leadership. She has read and reread it, and cited it often during our conversations. What alarmed her was the conspicuous absence of Britain from the speech. “Building resilience, building security – the themes that he develops are very similar to some of the things that I’m speaking about. But you know what, he references many other countries, and the EU, but does not mention Britain once.”

Listen: Jason Cowley discusses his interview with Rachel Reeves on the New Statesman podcast

[See also: Labour’s future will be conservative]

Rachel 1, Rachel 2

You could say there are two Rachel Reeves. Rachel 1 is the strategically cautious politician we know from her many public appearances and statements. In private, she is different: warmer and more open – and more vulnerable than she would have us believe. Friends and colleagues mention her thoughtfulness and courtesy, the handwritten thank-you notes she sends. Rachel remembers those who have supported or helped her, I was told. “She has grown in confidence, but to friends she remains the same warm south-London girl, devoted to her family and those close to her,” says Bernard Donoughue, a Labour peer who was head of both Harold Wilson’s and James Callaghan’s policy research units in the 1970s.

The technocratic vocabulary, the robotic delivery, the Gradgrindian discipline, the bobbed, helmet-like hair, the reserve – this is her armour and her defence. “Like many female politicians she wears many masks – through necessity,” one aide said. “The most straightforward I have seen her is when she is talking about her children.”

During the four-day trip to North America, she was the principal guest at a dinner co-hosted by Tina Brown, the writer and former magazine editor, at the Harvard Club in Midtown Manhattan. The guests were grandees from business, media, politics and culture. Reeves, who was delighted to meet Peggy Noonan, a columnist and former speechwriter for Ronald Reagan, and Adam Gopnik, the New Yorker essayist, took questions from around the table. Her answers were authoritative, especially when discussing economic policy.

The dinner was conducted under Chatham House rules, yet throughout Reeves remained supremely cautious. She has a raucous, infectious laugh and, her staff say, is “really good fun”. Throughout she was watchful and wary: there was not much laughter, raucous or otherwise. “She was good,” one of the guests said to me afterwards, “but a little dry. She doesn’t know how to do off-the-record. Americans like off-the-record.”

The guest had encountered Rachel 1, the hard-driving former Bank of England economist who is rigidly committed to fiscal discipline. “Prudence for a purpose,” Gordon Brown used to say in the early years of his chancellorship, to explain his approach. Reeves has her own mantra. “My colleagues say, ‘Rachel likes to say no,’” she said when I asked her about Labour’s spending priorities.

Her interlocutor at the Peterson Institute was Adam Posen, the American economist. His style was laconic, nicely idiomatic, wryly conversational. He seemed unconvinced as he teased out the tensions between Reeves’ fiscal rules and her grand, transformative economic ambitions.

Reeves answered his questions competently if stiffly, as if speaking from a rehearsed script rather than improvising or responding to the atmosphere in the room. She might have been nervous – she was genuinely excited to be on her first official foreign trip as shadow chancellor, apart from the brief visit she made with Keir Starmer to the World Economic Forum at Davos in January – but she was also guarded. She had set the boundaries of her own position and wouldn’t transcend them. Her caution and tone were unchanged even as she announced the near-death of globalisation – that phrase “as we know it” the inevitable coda, the qualifier, the softener.

There is another, more creative Rachel, however.

Rachel 2 has a hinterland. She is seriously interested in ideas. She reads widely and publishes books. She discusses pieces she’s read in the New Statesman – while joking about Nicholas Lezard’s column (her husband is a Lezard fan). She talks animatedly about the female economists who have inspired her – Joan Robinson, Mary Paley Marshall, and, among her contemporaries, Mariana Mazzucato, Diane Coyle and Janet Yellen.

Reeves feels a strong affinity with Yellen in particular. “She’s a role model and inspiration. She’s married to George Akerlof, who is a Nobel Prize winner in economics, so an amazing family. And she’s now at the summit of her career… driving through an incredibly exciting agenda which is giving hope back to ordinary Americans – but real hope, not the ideological, dreamy sort of stuff.”

Rachel 2 has emotional intelligence. In recent times she has opened up more about her early family life – about her grandparents from south Wales who were Salvationists, her parents’ divorce (they were both primary school teachers) and her relationship with her sister, Ellie, also a Labour MP. She has a son and daughter and is a religious believer. “I am a Christian, yes, but not a Salvationist. My grandparents were a big influence on me. They didn’t have very much, but they gave so much back. I spent my holidays in the Salvation Army shop in Kettering, helping out, because that’s what they did. They lived in a council flat in Kettering, my grandad worked in the shoe factories, my grandma worked at home, making shoelaces. They are role models: service and giving something back motivates me. The Salvation Army did a lot for my family – my dad learned a musical instrument because of them; he played in the Salvation Army band, and they taught him.”

Rachel Reeves with her sister, Ellie, also a Labour MP, in March. Photo by Conor O’Leary for the New Statesman

[See also: Rachel and Ellie Reeves: “We were constantly underestimated as state-school girls”]

On our train journey from New York to Washington, I asked her about her school days in south London and what was expected of her back then as a clever, religious girl from a modest background. She was a teenage chess champion and competed in tournaments against boys from more privileged schools. These smooth-voiced boys had great expectations and complete self-assurance. They knew what they wanted and where they were going next: they told her so. Reeves did not have the same confidence or sense of destiny. She did not know what was possible for someone from her background, nor what could be achieved or where she was going next. Until one day in assembly at her secondary school, Cator Park, in Bromley, she heard something that changed her life.

“I was in Year 11, doing my GCSEs, and we had an assembly that day with our head teacher, who was a very inspiring woman. And she said that all of us had to think that day of these two girls in the upper sixth form who were doing the Oxford interview. They were the first two girls ever from my school to apply, and one of them, Natalie, got in. She was the first girl ever from my school to go to Oxford. I remember sitting in the hall that day and thinking, ‘That could be me, I could do that!’ But no one had ever said that to me before. I didn’t really know anybody who had been to university.” Her parents, Graham and Sally Reeves, had been to teacher training college but were not university graduates.

“I also remember at chess, boys talking about which Oxford and Cambridge colleges they were going to apply to. I just kept quiet, because I really didn’t know what they were talking about; I didn’t know about the college system or anything like that. It was only when those two girls from Cator Park applied to Oxford that I then just had it in my mind that ‘I want to do that’. Two years later, I did. I applied to the same college as Natalie [New College].”

As she spoke about Natalie, whom she did not know personally but whose example had been so inspiring, her eyes filled with tears. Later in our conversation, I remarked on how moved she’d been when recalling the girl from her school who had gone to Oxford. “She’ll have no idea that she had this impact on me… But it opened up opportunities that I never would have had and took me in a different direction.”

As she said this, her eyes again filled with tears, and she softly wiped her cheeks.

On graduation, Reeves was offered two jobs: at the Bank of England and at Goldman Sachs. “Goldman Sachs were very clear to me that nobody rejected an offer from Goldman Sachs. But I did.”

Was it a difficult decision?

“The salary would have been more than twice what I got at the Bank – more than £50k… it wasn’t what I wanted to do. I wanted to be an economist; I believed in public service. Look, we weren’t poor, growing up. My dad was working class, but I grew up in a middle-class family – my mum and dad were primary-school teachers. But we didn’t have loads of money. I remember my mum kept all her receipts and went through those when she got her bank statement and ticked them off. My mum said to me when the energy crisis started, when there was all that mortgage turmoil, or the start of the mortgage turmoil last year, she said to me, ‘I don’t know how I would have coped if this had happened when I was in my late twenties, thirties.’ She’d split up with my dad and we just didn’t have huge amounts of money. That gives me empathy with people who are doing fine, they’re working, they’ve got decent jobs, but they still have to account for money and account for everything.”

Into the wilderness

After Labour lost the 2015 general election and Jeremy Corbyn became party leader, Rachel Reeves retreated from front-line politics. She knew she was disliked and mistrusted by the left. Poorly expressed comments on the need for Labour to be tougher on welfare benefits than the Tories, made when she was shadow work and pensions secretary, and which she later regretted, antagonised her detractors, and this was their time.

Through the Corbyn years Reeves maintained her public profile as chair of the Business, Energy and Industrial Strategy Select Committee but she also wanted time and space enough in which to think and read and write. Hurt by the abuse directed at her, she gradually stopped looking at social media. “To be honest, I don’t feel it so much now. I used to look at Twitter, and it’s not good for you, so I don’t look at Twitter or anything like that now. I don’t think it’s healthy. I know it’s a sort of cesspit and I just don’t go there. I do my stuff, I do what I think is right, and then people can judge me accordingly.”

She became an MP in 2010, part of a well-regarded intake that included Shabana Mahmood, Lisa Nandy, Chuka Umunna, Luciana Berger and Emma Reynolds, all restless for power. Gordon Brown had identified her as a future Labour star when she worked at the Bank of England. She met her husband, Nicholas Joicey – a senior civil servant and former speechwriter for Brown – in Washington DC, while posted by the Bank as an economist at the British embassy. She was close to and trusted by Ed Miliband, and was wounded by his defeat. It was a shock when Corbyn won the leadership and, nine months later, a majority voted for Brexit in 2016.

“I voted Remain and I would do so again if we went back in time to 2016, but I do think that ship has sailed,” Reeves said when I asked whether Labour would ultimately seek to rejoin the single market and customs union. One of Starmer’s stated missions is for Britain, under a Labour government, to have the fastest growth among the G7 countries. This does not work electorally, nor even economically since Britain is not in control of the other six countries’ growth.

“When you hear, ‘Nigel Farage said this, Nigel Farage said that,’ I just don’t want to go back to that time when the political debate was so toxic,” Reeves said. “We’ve got to build on what we’ve got, and there are practical things that we could do in quite short order to improve upon the [Brexit] deal that has been secured, without reopening what was a pretty torrid time in our recent political history.”

During the years of her retreat, Reeves was preoccupied by certain key questions and themes. What didn’t Labour understand about the country it aspired to govern? What made its electoral coalition so fragile? How would a Labour government revitalise the towns and coastal regions, creating better jobs and a more resilient, place-based national economy and politics? If neither the counter-hegemonic project of Corbynite socialism nor a post-Brexit programme of domestic deregulation and tax cuts offered solutions, what did?

With the support of Labour Together, she worked on a pamphlet called “The Everyday Economy”. “Political economy,” she wrote, “is about the wider relationship of production, consumption and trade to culture, society and government, and so here larger questions are addressed about the kind of society Labour wants and how we can achieve it.” Later, during the pandemic, she chaired a series of webinars on resources for national renewal attended by writers, academics and policymakers, including David Edgerton, Jonathan Rutherford and Dani Rodrik. This was the groundwork, the preparation, for where she would end up today, aspiring to be Britain’s first female chancellor, and working out a new era-defining economic programme for what she calls “our age of insecurity”.

Bernard Donoughue has watched Reeves progress from “her initial shy caution” on the back benches to today’s would-be chancellor. From the beginning, he said, “she was helpfully clear that she wanted to be a future Labour chancellor of the Exchequer, not leader – though she is well qualified for that. Another key early decision was to decline sitting on the ill-fated Corbyn shadow cabinet. Since then, her economic knowledge has widened, her political judgement has deepened and hardened its edge. I have been acquainted with most Labour supremos since Hugh Dalton and she is professionally at the top of that league, promising to equal the great Denis Healey as a chancellor – and possibly to surpass him in political judgement and personal relations. The one future joy left in my long political life is to observe from a discreet distance Rachel taking over and shaping the Treasury into her Labour instrument.”

[See also: Faiza Shaheen: “I get annoyed by the ‘left candidate’ badge”]

When speaking to Reeves, one is reminded sometimes, because of her intellectual energy, of the preparation Margaret Thatcher did in opposition, in the early years of her leadership, the seminars on economics, Soviet history and foreign policy she attended, the questions she asked about the limits of socialist state power. Like Reeves, Thatcher wanted to break an economic consensus and create a new one but, unlike Reeves, she had an intellectual outrider inside the parliamentary party, Keith Joseph, a free-market ideologue and fellow MP, who was prepared to “think the unthinkable” and nurtured institutions of political ideas and analysis. She too went to Washington to give speeches as a relative unknown. Like Reeves, Thatcher wanted to make new transatlantic alliances, but hers were with the radical free-market right. If monetarism was the big idea then, as the welfare capitalist consensus unravelled at the end of the 1970s, could productivism be the first signs of its obverse today, in a comparable period of economic stagnation, rentier capitalism and high inflation? If Hayek and Friedman were the economists of choice for the Thatcherites, who are their equivalents today?

One of the recent books that has most influenced Reeves is David Edgerton’s The Rise and Fall of the British Nation (2018). I asked him about securonomics and Reeves’ recent Washington speech. “I think her position on the national economy and the everyday economy is interesting and important,” Edgerton, who is professor of modern British history at King’s College London, said, “but the emphasis on growth – while politically sensible – undermines the radicalness of the position taken. We need to think about things other than growth – like equality and redistribution and the greening of the economy, and exactly what will be required to achieve it. There will need to be significant adjustments in how we live. But it’s wonderful to see a thinking Labour politician, and not just one who is reading the Financial Times and Economist, but is trying to work out what the current conjuncture requires.”

Rachel Reeves outside the Capitol building in Washington DC, May 2023. Photo by Greg Kahn for the New Statesman

The Reeves doctrine

Britain has serious systemic problems – economic, social, environmental, constitutional – that demand radical solutions. Reeves has established her reputation for fiscal discipline but, critics from both the left and right say, there is an absence of radicalism. Andy Haldane, chief executive of the Royal Society and formerly chief economist of the Bank of England, in a recent interview with the New Statesman, lamented Labour’s lack of ambition, suggesting there is “not so much as a fag paper to put between Labour and the government when it comes to fiscal rules and fiscal rectitude right now”.

By historical standards, he said, it remains cheap for governments to borrow – and Labour should borrow to invest to nurture “public goods”, assets of tomorrow: clean air, clean water, clean energy and a flourishing biosphere. (In fact, gilt yields are back to 2008 levels, so borrowing is cheaper than it was in the late 1990s, but expensive compared with recent years.)

“With all respect to Andy,” Reeves countered, “and I know him well from the Bank of England, the government, in its fiscal rules, treats day-to-day spending and capital investment the same. Our fiscal rules are different; the scale of our ambition around the green prosperity plan is just on a totally different page to this government, and that is because of the way we treat current and capital independently. That’s the key distinction for us. We’ve said that we want to get debt down as a share of GDP, and that is the right approach. It’s getting close to 100 per cent, and I want to get that on a downward trajectory. We will cover day-to-day spending through tax receipts, and that is the fiscally responsible thing to do, and then, subject to that, we will invest.”

During one of our conversations, I put it to Reeves that Corbyn and his shadow chancellor, John McDonnell, had similarly grand ambitions to rebuild Britain’s infrastructure, invest in public services and implement a green prosperity plan, their so-called Green New Deal. How does her programme differ from theirs as expounded in the 2019 manifesto? “Well, they believed in this sort of magic money tree, that you could spend money that you didn’t have,” she said. “We had a manifesto in 2019 that had a number of spending commitments. It was never entirely clear where the money was going to come from, and then, during the election campaign, more things were announced without explaining where the money was going to come from.”

(In fact, McDonnell costed Labour’s day-to-day manifesto spending plans; it was the £58bn women’s pension compensation commitment made during the campaign that was not costed.)

As chancellor, Reeves would be rigidly committed to economic and fiscal responsibility, she’s told us that – but, at the same time, Ed Miliband, the shadow climate change secretary and a breathless advocate of Labour’s “green prosperity plan”, has pledged huge investment – as much as £28bn a year – to fund the energy transition.

Miliband led Labour to defeat in 2015 and concern is growing that he has inadvertently set a trap for his party – because Starmer and Reeves have not explained how they would fund the proposed £28bn a year for capital spending on green growth. Would it come from taxation or borrowing? Biden’s Inflation Reduction Act was funded in part by tax rises and removing tax breaks for the wealthiest investors, a condition of getting it through the Senate. Reeves made no mention of the £28bn annual commitment in her Washington speech and spoke to me about it only in abstraction; it could be that it has already been dropped. “The green prosperity plan will only be possible if we have an iron grip on public spending and tax receipts,” she said.

A sceptic close to the Reeves project put it this way: “The commitments to invest in no more gas and coal and to create net zero in our energy supply are hostages to fortune and both dubious, even rash, propositions. Rachel has surrendered the green economics to Ed [Miliband] and needs to take back control.”

Radicalism vs restraint

Embracing ambiguity is part of what it means to do politics well – promising green growth but not saying how it would be funded, for instance. “A good politician should hold contradictory positions – it’s part of what it means to prepare the ground for what lies ahead,” David Edgerton told me.

A good politician, especially one who aspires to be chancellor in Britain, where the population has been beguiled into betting everything on the housing market, is also sensitive to the power of the bond markets and movements in gilt prices: if Reeves did not commit to getting borrowing under control, Labour would face a bond market sell-off as Truss did, in what Reeves derisively calls her “drive-by premiership”.

Yet the larger contradiction of the Reeves doctrine resides in the disharmony between the two Rachels, between the caution of Rachel 1 and the creativity of Rachel 2. The two opposing sides of her nature create conflict but also opportunity.

To my amusement, Reeves runs with the notion of the two Rachels but disagrees they are in conflict or opposition. “You have to have that cautious Rachel to be able to deliver the creative things that I definitely would associate myself with. If you just tried to do the exciting stuff – the green prosperity plan, the good jobs, the increases in the minimum wage, the getting rid of the non-doms to pay for the nurses, etc; if you just tried to do those things and said, ‘Don’t worry, the macro-economy will take care of itself,’ you’ll quickly fall over. Look at what Truss and Kwarteng tried to do. They tried to go for growth. I have nothing against going for growth – I want to go for growth – but what they forgot was that you needed that rock of fiscal and economic stability to underpin everything that you do. I won’t make those mistakes.”

To translate: the fragility of the British economy in the aftermath of the pandemic and the Truss-Kwarteng debacle creates a need for two Rachels: one who can tell the markets that the UK’s debt will be managed sustainably and that interest rates will be brought down, and another who is quietly more radical.

Jonathan Rutherford, who in the recent past worked closely with Reeves, is familiar with both Rachel 1 and Rachel 2. “Rachel was ahead of the Biden administration in recognising a new kind of supply-side economics focused on work and wages, families and local places. There is more to her than simply having the makings of a reliable, prudent chancellor, which she would be. The question is whether she has the confidence to harness her creative and more radical side to enable Labour to change the political weather, rather than just bunkering down to manage the coming storms. She is the critical figure in Labour’s future.”

Rachel Reeves in front of the New York skyline, May 2023. Photo by Spencer Platt / Getty Images

The Iron Chancellor

Over dinner one evening at the Tabard Inn in Dupont Circle, a favourite haunt of hers when she worked at the British embassy, Rachel Reeves spoke of her pride at the prospect of being Britain’s first female chancellor of the Exchequer. Her team of advisers on the trip were all female: Katie Martin, chief of staff, Heather Iqbal, head of communications, Maude Sieghart, visits officer. She is passionate about women’s equality and opportunity. She remembers those public-school boys against whom she played chess, their ease and unearned sense of entitlement. They knew what they wanted just as much as she did not back then. And she cannot forget Natalie, the girl from Cator Park School whose example cleared a path through the woods and showed her the way ahead.

If Labour wins the next election, the economic challenges will be as critical as those of the late 1970s, when Thatcher won power at a time of trade union militancy and social disorder and then set about remaking Britain through harsh confrontation. It will not be like 1997, when Blair swept all before him and inherited a growing economy in a more benign era. “The terrible economic mess which will be left by the defeated Tories will almost equal the challenges facing Attlee in 1945,” said Bernard Donoughue.

The US-led rules-based liberal order has fractured; globalisation as we knew it is dead; the world is fragmenting into rival blocks. Brexit is failing. The common complaint one hears is “nothing works”. The public has little faith in our political parties. A sense of mass disaffection has settled on these islands. What comes next?

Reeves is correct to say that a new consensus, however inchoate, is forming. Even before the pandemic, the state, as John Gray has written, was returning to its primary function, which is the provision of security. Reeves understands this and believes she knows what needs to be done. She, as Rutherford said, is the critical figure in Labour’s future. But which of the two Rachels will prevail? Social democratic incrementalism will not be enough in an age of polycrisis. What to do about the housing crisis, the NHS crisis, the dysfunction of government, intergenerational inequality? It goes on.

Can Labour even win? If so, will it be beaten back by its own chronic caution, its lack of confidence, its sense of imposter syndrome? Will it be beaten back by the markets? Labour is used to losing, after all, not winning. “We haven’t won for an awfully long time,” Reeves said. “You’ve got to be over the age of 70 to remember the election of a Labour prime minister who was not Tony Blair.”

Rachel Reeves came to the US to show that she was serious about preparing for power, to show that she was ready and was not an imposter. She wanted to show that she belonged at the top table of international finance ministers, alongside Janet Yellen, her role model and inspiration. “I expect she’ll be one of the first people, if not the first person, I would pick up the phone to if I became chancellor of the Exchequer,” she said.

Would Reeves one day like to be known as the Iron Chancellor, I asked on the train to Washington.

“You can call me that if you want!” She laughed. “There’s iron discipline in our fiscal rules, and my colleagues know that, and I think they respect me for it. Liz Truss and Kwarteng said they rejected ‘abacus economics’ and I’ve always thought it’s quite important to be able to add up if you want to run the Treasury. I want Labour to win the next election. I really do believe that you’ve got to show your workings and where the money’s going to come from. I want people to be able to trust me.”

Rachel 1 knows what she wants and so does Rachel 2. Will they be antagonists, or work in harmony?

[See also: Keir Starmer: This is what I believe]

This article appears in the 07 Jun 2023 issue of the New Statesman, The Reeves Doctrine