It’s ‘growth week’ in government, as the Chancellor Rachel Reeves attempts to convince sceptical business leaders, bankers and voters that she has a plan to get the economy going. After a dismal start to the year in which bond market jitters saw the cost of government borrowing soar, Reeves is hoping to turn things around with a speech on Wednesday setting out the measures and choices the government is willing to make to drive economic growth. Much of the content is already out there with talk of the government supporting a third runway at Heathrow airport amongst other things. Since the reports first emerged, there have been some grumblings among Labour MPs over the government prioritising growth at the cost of environmentalism.
The Chancellor told MPs that the government must go ‘further and faster’
On Monday night, Reeves addressed Labour MPs in a bid to get them on side. The Chancellor told those present that the government must go ‘further and faster’ as ‘the cost of living pressures are still very real for working people across Britian. And the only way we can turn this around is through economic growth’:
‘Economic growth built on the platform of stability, investment and reform. That’s what my speech on Wednesday will be about. Will that growth come easy? No. There are no easy routes out. There are always reasons for Government to say ‘no’.’
The Q&A session afterwards was largely supportive (though such meetings tend to attract loyalists) with just one hostile question raising objections to airport expansion. Since meeting with MPs, Reeves – along with Keir Starmer – has moved on to business leaders. The pair headed to Bloomberg HQ in London this morning where they addressed a crowd that included CEOs from Lloyds Banking Group, Nationwide Building Society, BAE Systems and Tesco. Starmer told attendees that he had instructed the cabinet to make growth the number one mission in their brief, suggesting new policies will only win approval if ministers are able to set out their growth proposals.
Some of what Reeves and Starmer have so far announced or hinted at appears to be a step in the right direction on growth: reducing the number of judicial reviews that block infrastructure, limiting the scope for environmental quangos and positive language around airport expansion. However, making sure ministers stick to the script and are willing to make the tricky calls will be key. What’s more, while business leaders are encouraged by some of the talk from Reeves over the past week, they still have deep reservations over the Budget and the rise to employer national insurance.
There is a Yimby group of Labour MPs who are publicly pro all of the above. But there are concerns that some MPs in marginal seats that Labour did not expect to win, might decide it is better to be a ‘local champion’ and side with residents aghast at new developments than come to the government’s defence. In government, one ray of light to the bad start of the year for Reeves is that some of her supporters now think the penny has dropped with ministers and MPs that they are going to have to make difficult decisions as there is little spare cash.
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