Rachel Reeves criticises New Labour's economic legacy as she pitches herself as a ‘modern-day Margaret Thatcher’

19 March 2024, 19:38

Rachel Reeves said New Labour's attempts to address 'economic security and key weaknesses on productivity and regional inequality failed
Rachel Reeves said New Labour's attempts to address 'economic security and key weaknesses on productivity and regional inequality failed. Picture: Getty
Kieran Kelly

By Kieran Kelly

Rachel Reeves has criticised New Labour's economic record, claiming that attempts to address economic security, productivity and regional inequality failed.

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Ms Reeves said New Labour's economic weaknesses were "exposed by the global financial crisis" in a highly-anticipated speech.

She went on to say that the UK's labour market remained characterised by 'too much insecurity' despite the efforts by Tony Blair and Gordon Brown.

"Despite sustained efforts to address our key weaknesses on productivity and regional inequality, they persisted, and so too did the festering gap between large parts of the country and Westminster politics," Ms Reeves said.

Reeves criticised New Labour's economic legacy
Reeves criticised New Labour's economic legacy. Picture: Getty

The speech was given as part of her Mais lecture, which is considered to be a sort of rite of passage for all aspiring chancellors after Margaret Thatcher's Chancellor Nigel Lawson gave a speech about how he would reform the economy in the 1980s.

In fact, Ms Reeves has been channelling her inner Thatcher, as she warned the Britain was facing a '1979 moment' ahead of the next general election.

Pitching herself as Labour's next version of Thatcher, the Shadow Chancellor vowed: “When we speak of a decade of national renewal, that is what we mean.

“As we did at the end of the 1970s, we stand at an inflection point, and as in earlier decades, the solution lies in wide-ranging supply-side reform to drive investment, remove the blockages constraining our productive capacity, and fashion a new economic settlement, drawing on evolutions in economic thought.”

Read More: Labour government would aim to cut taxes, Rachel Reeves says, after Conservatives slash National Insurance

Read More: Labour not able to immediately ‘turn things around’ after election, Reeves warns

Ms Reeves has also set out what her party's fiscal rules would be if she gets into power.

"Let me be clear about the rules which will bind the next Labour government," she said.

"That the current budget must move into balance, so that day-to-day costs are met by revenues.

"And that debt must be falling as a share of the economy by the fifth year of the forecast, creating the space to respond to future crises."

Rachel Reeves
Rachel Reeves. Picture: Getty

Ms Reeves' vision for a Labour-run economy has not gone down well with everyone in her party, with some unhappy with her invoking Mrs Thatcher.

“Thatcher’s Government did not bring about ‘national renewal’ but instead misery for millions of working-class people and ballooning inequality,” Momentum, a group widely associated with Jeremy Corbyn's tenure as Labour leader, said.

Richard Leonard MSP, the former Scottish Labour party leader, added: “In the 1980s manufacturing was butchered, factory after factory closed, privatisation was let rip, unemployment rocketed, profits boomed, the wage share fell, the rich got richer, and inequality soared. No rewriting of history.

“Thatcher didn’t renew the economy, she broke it.”

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