If Rachel Reeves is Labour’s brightest star, why has she opened the door for a Tory fightback?

FRESH from issuing a soundbite that last Wednesday’s Budget was simply ‘papering over the cracks of 13 years of economic failure’, Shadow Chancellor Rachel Reeves appeared on Radio 4’s Today programme. Presenter Amol Rajan read out to her a list of childcare measures announced in the Budget. Which did Labour oppose, he asked, and what would she and her party do differently?

Reeves waffled for a minute, then admitted she would support all of them.

Rajan tried a different tack. Labour’s Education spokeswoman Bridget Phillipson had recently made a major speech on childcare but it didn’t contain any costed proposals. So what actually was Labour’s childcare policy? Reeves waffled again, then said: ‘We’ll set all our plans out closer to an Election.’

Rajan moved on to immigration. Did Labour support higher or lower net migration? Reeves muttered something about apprenticeships.

What about tax thresholds? Did Labour support or oppose the Government’s policy? Reeves stonewalled, before insisting: ‘I’ve got plans!’ What were those plans in respect of tax thresholds, Rajan enquired again. ‘I can’t say,’ Reeves replied.

Labour’s Shadow Chancellor is talked of as one of her party’s brightest stars. Chat with any of Sir Keir Starmer’s team, and they speak of her in almost reverential tones. ‘Rachel is a brilliant performer,’ one Starmer ally recently told me. ‘She’s the real deputy leader.’

At the moment, Reeves is not performing brilliantly. She’s pedestrian. She’s over-hyped. And as the last week has shown, she’s opening the door for a Tory fightback on the economy.

Ask Reeves’s cheerleaders if she’s really so great, what is it that she’s actually done, they will look at you blankly. As if some sort of sacrilege has been uttered. Then they reach for the same, well-worn list of purported achievements.

Top of it is Labour’s lead on the economy. The voters currently rate Labour better on economic competence, with YouGov’s tracker on the issue giving it a small, if unspectacular, six-point lead. But that represents a drop from 17 points since last October. And given the economic pain unleashed by the Truss Budget, the costof-living crisis and the highest tax burden since the Second World War, it hardly represents a ringing endorsement of Labour’s own economic policy offering.

Reeves’s allies are also keen to highlight what they call her ‘economic outreach’. One told me:

‘She’s been doing a lot of work rebuilding relationships with the business community – and it’s working. You could see it at party conference. The suits were back.’

And again it’s true the boardrooms of corporate Britain are opening to Reeves and her team. But that’s only to be expected. UK plc chief executives can read the opinion polls as well as anyone else. They recognise that the 44-year-old former Bank of England economist is on course for No 11 and are making the appropriate ingratiating noises.

But aside from being showered with warm words, they are as much in the dark about the detail of Labour’s economic strategy as the rest of the country. A further success cited by Reeves’s admirers is the claim she outflanked the Government over the windfall tax for the energy companies. ‘That was all Rachel’s strategy,’ a Shadow Cabinet colleague told me. ‘It tied Boris Johnson, and then Truss, in knots. It was one of our biggest wins.’

But it wasn’t Rachel Reeves’s strategy. It was Gordon Brown’s. The idea of using a windfall tax on blue-chip profiteers to draw a political dividing line between Labour and the Tories was first rolled out in the mid-1990s. And the fact that Reeves is having to appropriate it nearly 30 years later is telling. Labour likes to claim its economic policy vacuum is a product of tactical ingenuity. ‘We’re not going to give the Tories any easy targets,’ one adviser claimed. ‘We’re going to keep our powder dry till the timing is right.’ But Reeves’s powder is becoming so dry it’s in danger of blowing away into thin air. At the equivalent stage of the electoral cycle in the 1990s, Gordon Brown had seized control of the economic debate with a series of bold policy initiatives. A windfall tax. A national minimum wage. Public Private Partnerships. The welfare-to-work programme.

What is Rachel Reeves offering? A National Economic Council. A Modern Industrial Strategy. An abstract ambition for Britain to somehow have the highest sustained growth in the G7.

Even the one major plan she has announced – her staggeringly expensive £28billion green industrial revolution – is being watered down, with Reeves now saying it will be subordinated to her fiscal and debt-reduction rules.

Labour strategists believe they are minimising the opportunities for the Tory attack machine to come spluttering back to life. But the opposite is true.

For the first time since Boris Johnson became embroiled in the Partygate farrago, Tory officials believe they may have identified a route to victory. With the economy acting as their compass.

‘Labour’s economic strategy is baffling,’ one senior Tory adviser told me. ‘It’s just a lot of vague nonsense. There’s no coherent plan. Highest growth in the G7? Well great, we all want that! The question they need to answer is how are they going to deliver it.’

Ask any Shadow Minister that question and you are met with blank looks. The reality is Reeves is not attempting to win the economic debate. Instead, she’s sitting back and hoping Jeremy Hunt and Rishi Sunak will lose it.

But that’s no longer the surefire bet it was back when Liz Truss and Kwasi Kwarteng were setting the economy ablaze. Though it didn’t get the political juices racing, Hunt landed his Budget successfully.

‘Given the limited room to play with – and the limited amount of money available – it went well,’ a Treasury ally said. ‘We know people wanted us to do more, especially on tax cuts. But we’ll get there. This has laid the groundwork.’

Meanwhile, Labour is becoming nervous at the way the dire growth predictions for 2023 are slowly being revised up. The day before the Budget, Reeves distributed an advert that stated: ‘Under the Tories, the UK is the only G7 country with negative growth this year.’

It was a wholly false claim based on an outdated International Monetary Fund forecast. But it was illustrative of how concerned the Shadow Chancellor is to manipulate the economic narrative, rather than rely on the facts.

Ministers also believe Reeves has fallen into a trap by pledging to reverse the scrapping of the £1 million lifetime tax-free pension allowance. One told me: ‘It’s bizarre. Why has Labour suddenly decided to go to war with people such as doctors, headteachers, air-traffic controllers, the top brass of the military and civil servants?’

For their part, Labour strategists say pensions reforms are another Tory own goal – one that will allow them again to be framed as being on the side of the rich, rather than hard-working families. And although the Office for Budget Responsibility has junked its prediction the economy is heading for a technical recession, its forecast of a 0.2 per cent contraction in 2023 should give Sunak and Hunt cold comfort.

Any form of sustained economic contraction will have a negative – and from the Government’s perspective, probably terminal – impact at the ballot box. But, for the moment, Tory spirits have been raised. ‘We can now see a path to staying in power,’ one official told me, adding jokingly: ‘It’s a very narrow path. But fortunately Rishi and Jeremy are both very thin!’

Rachel Reeves’s job is to block off that route. But at the moment she’s failing. If Labour’s Shadow Chancellor really does have a plan to bring Britain the highest growth of any major global economy, excellent. It’s high time to share it with the rest of us.

There is no attempt to win the debate. She’s hoping Hunt will lose it