Among the most famous definitions of narrative comes from EM Forster. “The king died and then the queen died” is a story, he said, while “The king died and then the queen died of grief” is a plot. The first merely recounts events, while the second smuggles in cause; it elicits a reader’s curiosity and empathy.
Doubtless Rachel Reeves will have much on her mind this close to her first budget, but once at the dispatch box she would do well to remember some Forster. Any chancellor can unleash a barrage of numbers and forecasts, tarmac an A-road or scrap a tax relief – or discover both a huge black hole in funding alongside a handy new measurement of government debt. But the most consequential governments have also offered a big political narrative.
From Nigel Lawson to Gordon Brown to George Osborne, the major chancellors set out their diagnoses of the ills of the economy and a prescription for how to fix things, along with their prognosis. Whether right or wrong, their ideas were at least clear and coherent. Whitehall officials and voters alike understood what they were aiming at. Britain’s first female chancellor fits many of the criteria to be an important one. Ms Reeves is smart and experienced, and the new government commands a huge majority. The chancellor is nothing if not ambitious, comparing her plans to Labour’s greatest budgets. She also comes armed with a diagnosis.
The core issue that Ms Reeves plans to tackle is low investment, which she dubs “the new ‘British disease’”. Only by raising investment, the chancellor argues, will the UK decarbonise the National Grid, build the industries of the future and allow workers to do more with less. In this spring’s Mais lecture, Ms Reeves mentioned “invest” or “investment” 39 times, far more than “spend” or “spending”, or indeed “Labour”.
Yet in the election campaign, Labour majored on “economic stability” and “tough spending rules” (number one on its pledge card). Once in government, it has been almost silent on how and when and to what scale this investment will happen, outside an investment summit in London that largely served as an opportunity for big businesses to reaffirm their existing plans. As Kate Alexander-Shaw of the London School of Economics argues in the latest issue of the journal Renewal, this leaves Labour in a curious position of having “a prescription at odds with the diagnosis”. Ms Reeves is concerned about low-skilled workers, yet investing in skills counts as day-to-day spending which, under her own rules, is tightly constrained.
Easing those rules will allow the government to implement more substantial policies, and the chancellor was right last week to find extra budgetary room to borrow and build. Given that this week’s headlines will be about big tax rises and spending cuts, this will provide some relief on a difficult day. Beyond Whitehall accounting, however, lies a larger issue of political strategy. For four decades, the prescriptions issued by administrations of right and left have been for a smaller or more tightly bound state, but the implication of Ms Reeves’ diagnosis is that the state must be bigger and more active. Following through on that would mark a historic break in British politics, both economically and electorally. With its landslide win and huge majority, after years of failed austerity, this Labour government is amply entitled to make that change.
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