The shadow chancellor, Rachel Reeves, will pledge to embark on a “decade of renewal” if Labour is returned to power at the next election.
Speaking at the annual Mais lecture in London on Tuesday, Reeves will tell an audience of bankers and financial executives that she will create a more secure and stable backdrop for private sector businesses to plan and invest in the UK.
She will liken the economic turbulence buffeting western economies to the “state of flux” seen in the 1970s – but say that rather than the answer being the widespread privatisation ushered in by Margaret Thatcher in the 1980s, there is a growing consensus around “mission-led governments” taking centre stage.
“What I want to argue today is that, as in the 1970s, we find ourselves in a moment of flux in which old certainties about economic management have been found wanting, the economic mainstream is adapting, but a new political consensus has yet to cohere,” she will say in her speech at the Bayes business school.
Restoring economic growth will be the central purpose of the next Labour government based on partnerships with business, she will say. “Once again, we have found ourselves in a moment of political turbulence and recurrent crises with the burden falling on the shoulders of working people; with at its root, a failure to deliver the supply-side reform needed to equip Britain to compete in a fast-changing world.”
She will pitch her economic measures as being in line with large international bodies such as the Organisation for Economic Co-operation and Development and the International Monetary Fund, which have argued for reductions in inequality to boost growth.
The annual Mais lecture has become a set-piece event for central bank governors, chancellors and prime ministers to set out their economic philosophy. In 2022, Rishi Sunak, then the chancellor, said he wanted to cut taxes “sustainably” and downgrade the role played by the state as an engine of growth.
Sunak was widely regarded as having used the speech to quell concern among Tory backbenchers concerned about taxation rising to its highest level in 70 years.
Reeves will vow to generate growth based on “strong and secure foundations”, which is what “generates higher living standards for households, raises incomes and gives people more choices about how to lead a good life”.
Labour has come under fire for cutting billions of pounds from its plans for investment. Last month, Keir Starmer and Reeves jointly announced they would reduce Labour’s green prosperity plan from £28bn a year to less than £15bn – only a third of which would be new money.
In a message to her own backbenchers, Reeves will downplay a Labour government’s ability to reverse Tory cuts in public services and increase investment, saying the next government will inherit the worst set of economic circumstances since the second world war.
“No one election will wipe that inheritance away,” she will say. “There can be no clean slate. We must face the world as it is, not as we would have it be. I am under no illusions about the challenge.
“I suggest that the answer today is an economic policy which recognises how our world has changed. What is demanded is a decade of national renewal shaping the institutional architecture of the British economy in the direction of mission-led government.”
Tellingly, Reeves will emphasise the need to work in partnership with the private sector to drive investment, as one of three central policy initiatives to boost growth, with a guarantee of stability, and institute “reform to unlock the contribution of working people and the untapped potential throughout our economy”.
