The City will bid good riddance to Rachel Reeves
Rachel Reeves should be remembered: for dissembling, breaking promises and making Brits poorer. Little consolation, then, that her likely successor Ed Miliband will be so much worse, says Alys Denby
Rachel Reeves will make what is likely to be her final Mansion House Speech this evening and will encourage Andy Burnham to continue her legacy. She will tell city grandees that the economy is strong because of the choices she has made and that only by maintaining the credibility she has earned can the government continue its programme of radical change.
The City, however, will be wishing her good riddance. She may have wooed business from opposition with her “smoked salmon offensive” but immediately squandered all good will. She managed the remarkable feat of harming the economy before even giving her first Budget, talking in apocalyptic terms about the state of the public finances and damaging confidence with the threat of tax rises.
City figures often warn of “disinformation” about London repelling foreign investment, but when such suicidally negative narratives are emerging from the Treasury itself these are just whistles in the wind.
Acrobatic triangulation over what constituted a tax on “working people” led her to both break a manifesto pledge by freezing thresholds and levy a far more distorting tax on jobs. The predictable consequence is the highest level of unemployment in more than a decade. This contraction of opportunities for young people to get on the career ladder will have scarring effects for generations to come.
Duplicity
Barely a sector has escaped unscathed. Manufacturing has collapsed on her watch, with the closure of Denby pottery feeling particularly personal to me.
Supermarkets, some of Britain’s most competitive and consumer-focused businesses, were astonished to be told by the Treasury to impose price caps. Former Institute for Fiscal Studies boss Paul Johnson said he was “lost for words” at the plan and Helen Dickinson, the chief executive of the British Retail Consortium described the idea as “1970s-style price control”.
Hospitality has been hit particularly hard by Reeves’ toxic cocktail of tax hikes, regulation and declining disposable incomes. Stephen Gould, chair of family-owned brewer McMullen’s has said that the last two Budgets have been “brutal” for his industry. “There is a fundamental duplicity in adding cost to businesses, particularly in relation to tax and labour, and then expecting businesses to grow to the benefit of all,” he said.
That is how she should be remembered: for dissembling, breaking promises and making Brits poorer. Little consolation, then, that her likely successor Ed Miliband will be so much worse.
Alys Denby is opinion and features editor of City PM