In an exclusive interview, shadow chief secretary to the Treasury Rachel Reeves tells CN she is fixing her sights firmly on the “climate of uncertainty” in a bid to win back industry hearts and boost the economy.
Tipped by many as Labour’s rising star, 33-year-old Rachel Reeves was the youngest member of Ed Miliband’s cabinet, and has her work cut out in trying to rebuild the economic credibility of her party.
But with the economy flatlining – and construction in freefall – there’s plenty of people looking for politicians with fresh ideas.
She told CN that over the years “we’ve seen abrupt and arbitrary changes of policy, dither and delay on critical decisions, and endless fiddling with regulatory frameworks that can make it harder, not easier, to get projects moving forward.”
“We need to set out a clear vision of the infrastructure we are going to need to support the economy we want to build, and develop an active government approach to working with investors and the industry to deliver it”.
“Projects don’t fit neatly within political cycles but are long-term enterprises”
This vision, so far, includes a temporary cut to VAT on home improvements to five per cent, hauling forward long-term infrastructure work, and repeating a tax on bankers’ bonuses, in the hope of using the money to build 25,000 affordable homes. And she has backed investment in high-speed rail networks.
Ms Reeves also says she’d like to boost competition in the banking sector to tackle long-term mortgage availability, and bring in tax cuts for families and small businesses. She says NewBuy was “a step in the right direction, but results so far have been modest” and that there are now “real doubts” about credit easing schemes.
But she thinks the malaise that has gripped the country’s financial powerhouses and strangled the housing market has deeper roots: “Fundamentally, we think there needs to be more competition in the banking sector to improve access to finance for both families and businesses.”
“That’s why we’ve been pressing for the recommendations of the Vickers review to be implemented in full and without delay. And it’s why Ed Balls, Chuka Umunna and I are also looking at plans for a British Investment Bank that could be a new alternative source of finance for small businesses.”
Labour probably won’t get another shot at running the country until 2015, but the west Leeds MP is planning for the long-haul. “Projects don’t fit neatly within political cycles but are long-term enterprises,” she said.
“They are damaged by chopping and changing and uncertainty. The challenge for politicians is to understand this and build it into policy-making to ensure we genuinely invest for the long term and give businesses the certainty to invest too.”
Ms Reeves says she sympathises with those frustrated by the volume of announcements being made as output figures remain bleak and housing starts continue to stagnate, adding that the government’s “increasingly complex schemes and initiatives” seemed “more designed to generate headlines than get diggers in the ground”.
This is familiar ground for Ms Reeves who worked at the Bank of England for ten years, including alongside newly-appointed business minister Matthew Hancock, before becoming an MP in 2010.
“The Tory-led government is desperately trying to distract attention from its central economic failure,” she said. “Since they’ve been in office we’ve had no growth at all in our economy, we’re now in a double-dip recession and projections for next year are being repeatedly downgraded.”
“The construction sector has been hit particularly hard both by steep cuts to public sector capital investment and the collapse of confidence in the private sector. Half way through this year construction output was down 9.5 per cent on a year before, and housing starts have fallen 10 per cent in the past year.”
She refused to be drawn on Labour’s borrowing plans, but said her party wants to work towards “bringing forward infrastructure projects along with other measures to boost confidence.”
“This would secure the jobs and growth we need to get the deficit down”, she added, “as well as the productivity-raising investments that are essential to securing national prosperity.”