Rachel Reeves has delivered her first speech as shadow chancellor at the Labour party conference, setting out her vision for the economy and the country under a Labour government for the first time. Reeves unveiled plans to scrap business rates, establish a climate investment fund, and she outlined her bigger thinking on the economy, with a line that we are going to hear repeatedly in the coming years: Labour will “tax fairly, spend wisely and get the economy firing on all cylinders”.
When a Labour figure began telling me recently that Reeves has been working on her speech “since the summer”, we both laughed after I admitted that I half-expected them to say “since she was a girl”. It wouldn’t have been a surprising thing to be told about Reeves, such is her famous work ethic and long-stated ambition to be the first female chancellor of the exchequer.
The truth is that, even though Reeves only officially began writing today’s speech at the beginning of the summer recess, it is the product of the thinking she has been doing for years: throughout her career, as a Labour politician and former Bank of England economist, but in particular during her time on the backbenches in the Corbyn era, considering more seriously her politics after an intense period as a shadow cabinet member under Ed Miliband’s leadership. She told the New Statesman in February that she “used my time better on the backbenches, in a way, than I did on the front bench” and that the break on the backbenches has made her “a bit more reflective, a bit clearer about what I want to achieve in politics, and in government, and in life”.
This speech is the fruit of that reflection. It returns to the idea of the “everyday economy”, which describes the parts of the economy that sustain our everyday lives but are often under-valued or overlooked, such as care work and retail. Reeves has been interested in this way of thinking for a long time and on published a pamphlet on the subject in 2018. Her approach builds on recent academic work on the “foundational economy”, seeking to reappropriate it for a more political, accessible context.
The economic argument Reeves has been making since that pamphlet is that if we can increase productivity in the everyday economy, we will raise the wages and living standards of the British people. Economic growth has been weak for years and the recovery from coronavirus is projected to be weaker than expected: the shadow chancellor’s thinking is that we only have a strong economy once we address the squeezed earnings and productivity of the many people working in the fundamental, typically unglamorous and unappreciated areas.
But beyond the economic rationale for it, the shadow chancellor and those close to her hope that this is a radical new way of talking about the economy in a way that is rooted in people’s everyday lives.
“I’m here to talk about the economy,” Reeves said today. “But not in the way that you might expect. Because our economy isn’t just lines on a graph, distant from most people’s lives. Our economy is about all of us. The places we live, the people we love, and the work we do.”
Reeves believes the pandemic has vindicated her economic analysis from 2018, shining a light into the cracks in fundamental parts of the economy. She leant into that in today’s speech, noting that it was “key workers” – “the care workers; the delivery drivers; the cleaners; the supermarket workers; the staff in our NHS, our schools and all our frontline services” who kept Britain ticking over when all but the essentials were reined in during lockdown, but they often proved to be the people in insecure work who were being underpaid for that foundational work.
She believes that this “everyday economy” approach has been further vindicated by Joe Biden in the United States, where his investment in the backbone of the American economy and underappreciated workers has seen one of the strongest recoveries among developing countries post-Covid.
The shadow chancellor may well have been nervous ahead of her speech today, and not just because of usual public speaking jitters. She has been something of a hate figure of the Labour left since the Miliband era, when she took a hard line approach to welfare. In her roles under Keir Starmer, first as shadow chancellor of the Duchy of Lancaster and now as shadow chancellor, Reeves has been hoping to move past that image and propose policies that unite the party. Her plan for “radical insourcing”, which she first announced in her previous role and repeated in her speech today, received one of the biggest waves of applause of the speech, including from otherwise mostly unresponsive MPs from the Labour left. The “everyday economy” approach has a strong equalities underpinning to it that, Reeves hopes, will be popular across the party: fixing the “everyday economy” means fixing the neglected parts of the economy, such as caring and retail, that predominantly employ women and ethnic minorities.
The everyday economy means talking about jobs that, definitionally, exist everywhere. That is another, fundamental part of its appeal. While the Conservatives focus on one-off infrastructure projects and encourage competition between areas for the transformative power of that individual piece of investment, an approach that prioritises the everyday economy means improving and investing in and upskilling the fundamental jobs that can be found in every village, town and city in the UK: the jobs in supermarkets, retail, transport, childcare, health, social care, education and so on. That represents a Labour offer for every person in the UK, to raise standards and raise pay wherever they are. It also speaks to the thinking of another person close to the Labour leader: Claire Ainsley, Starmer’s executive director of policy and author of The New Working Class, a coinage to describe the people – nearly half of the population – living on low to middle incomes, employed as cleaners, hospitality workers and so on. This group is more diverse than the traditional working class and, crucially, a huge part of Labour’s target voter coalition if it is to win the next election.
Reeves’ speech at Labour conference is the beginning of these ideas beginning to trickle through into an offer for the British electorate. We can expect to see this underpinning more and more of Labour’s economic policymaking as we approach the next election.