The speech made by Rachel Reeves, the Shadow Chancellor of the Exchequer, to the Times CEO Summit in London on 16 June 2022.
Thank you Dominic, and thanks to the Times for hosting us today.
Since being appointed Shadow Chancellor I have had the privilege to visit inspiring British businesses.
From Castleton Mills, once a key part of West Yorkshire’s textiles industry – now reimagined as a creative, collaborative space housing freelancers and start-ups.
To world-recognised names like Rolls Royce in Derby – leading pioneering research to develop carbon-neutral aviation.
And Oxford Nanopore, one of our leading technology and life science firms.
Britain has huge economic strengths. Our leading universities, our language, our geography, our excellence in sectors from financial services to life sciences to cultural industries.
But questions of wealth creation have become too marginal to our politics.
After starting my career as an economist at the Bank of England, I spent several years at HBOS in Halifax.
I know what business can bring. Not just in prosperity and work which pays well – but in pride and identity.
After a decade in which people have seen their incomes stagnate and their public services cut to the bone, I don’t only see the task of building a more just society as a moral responsibility – though it is that – but also as the route to a dynamic economy with wealth creation at its core.
Through which opportunity is widely shared, and through which we can break out of our cycle of low growth, low productivity and underinvestment.
Labour is pro-worker and pro-business in the knowledge that the success of both is crucial to our country’s economic success.
A new partnership between government and business will be the foundation of everything the next Labour government will hope to achieve.
This a challenging moment.
The politics of stagflation and energy security have come to the fore for the first time in half a century.
But this present crisis is just the latest chapter in a longer economic story. Between 1997 and 2010, the UK economy grew at an average of 2.1 percent a year, but since then, growth has averaged just 1.5 percent a year.
And now the OECD forecasts that the UK will have zero growth next year – putting us behind every G20 economy bar Russia.
I don’t accept that economic decline is an inevitability.
But we do face a succession of challenges if we are to return to strong growth and shared prosperity.
Our success will rely on the leadership of both government and business.
I know businesses increasingly recognise their wider role in strengthening our economy and society.
But there is an onus on government to rethink too.
It is no longer enough – if it ever was – for government to simply get out of the way.
In America, the Biden administration is taking a more active role in tackling structural economic weaknesses. US Treasury Secretary Janet Yellen calls this approach ‘modern supply side economics.’
For the next Labour government, such an approach will mean government applying itself more concertedly to driving up the productive potential of our economy. By boosting labour supply through providing workers with the skills, healthcare, and childcare they need to flourish. By using its power of procurement to support businesses here in Britain. And as a strategic partner of business.
Let me talk more about that final point – strategic partnership.
I want to see UK companies thrive, to see great ideas come to fruition and for the UK to be a great place in which to invest.
But I don’t believe all that happens in a vacuum.
The state has to be active in fostering the conditions for our country to prosper, whether that is in sponsoring world leading research, getting the regulatory environment right, or in helping bridge the gap between a fantastic concept and the reality of its commercial production.
The last Labour Government developed an active industrial strategy on these lines – and for all my differences with the the Cameron and May governments, their efforts to continue this work were welcome.
But now these efforts have been abandoned – and the industrial strategy scrapped.
And for no clear reason, other than an ideological objection.
Ideology won’t help great British companies, but good partnership will.
That’s why Labour will bring local, regional and national leaders together with businesses, workers and universities to support the growth of high-tech, competitive industries of the future. And to map out a better way forward for the high-employment, low-productivity sectors on which we all rely – what I call the everyday economy.
But an approach to strategic partnership can’t stop there.
I agree with the director of the CBI, Tony Danker, that what is required to break us out of our cycle of underinvestment and low productivity is ‘catalytic public investment’.
Labour’s climate investment pledge would provide just that, and crowd in private sector investment – to create new markets and bolster existing ones.
And a modern supply side approach cannot and must not ignore the task of making Brexit work for British businesses and consumers.
So we must address the flaws in the Brexit deal hitting our food and drinks manufacturers, creative industries, professional services and more – through repairing and strengthening our supply chains, and building on the UK-EU trade deal to cut red tape for exporters.
We need to adopt an approach that seeks to solve problems in a practical way for UK companies, and aims to build trust – rather than continually retreating to the issue of Brexit as a domestic political wedge.
Any competitive market economy must offer opportunities for new, innovative and agile businesses to flourish.
Innovation is a great British strength. It’s in our DNA.
We have immense resources in the creativity and drive of our entrepreneurs, and the innovative capacity of our universities.
Fast-growing firms already contribute £1 trillion to our economy and employ 3.2 million people.
But something I have heard repeatedly is a real worry about the stubborn obstacles preventing many of them from scaling up, and the small number of start-ups listing in the UK.
Labour’s mission is to build an institutional ecosystem enabling the market access, finance, and skills that new and growing businesses need.
So today I am launching a review, led by a panel of entrepreneurs and experts including the economist and former Treasury Minister Lord Jim O’Neill, and tasked with charting a course to ensure Britain is the best place to start and to grow a business.
The review will be given a remit to ask the difficult questions and present solutions – about the incentives for growing businesses here compared with other countries, about access to capital – especially patient capital, about the skills, structures and incentives presented to our universities to spin out new businesses, and about how we extend opportunities to a more diverse range of entrepreneurs.
I consider it a key task for the next Labour government – a central part of a modern supply side approach – to provide answers to those questions, and to unleash the next generation of innovators and wealth creators.
The method I have outlined today is a modern supply-side approach, with government as a provider economic security, enabler of a highly-skilled workforce, and a strategic partner to business.
The object is a stronger society – underpinned by a thriving market economy in which opportunity is shared widely.
But to realise this, we need a different kind of leadership. Upholding strong institutions, practising transparent decision-making, and showing respect for business.
Keir Starmer’s Labour Party – proudly pro-worker and proudly pro-business – will offer that leadership.