Rachel Reeves plan for economic growth: ‘There are few levers she can pull in the short term’
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Rachel Reeves has unveiled new plans for economic growth - including supporting a third runway at Heathrow airport and easing planning restrictions for developers. But will her plan bring new confidence to British enterprise?
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In brief:
- Rachel Reeves, in a major speech on Labour's economic plans, confirmed support for Heathrow's third runway and announced an "Oxford-Cambridge growth corridor" aimed at creating Europe's Silicon Valley.
- Reeves also announced plans to streamline planning processes and reduce environmental requirements for developers.
- The speech aimed to reassure British businesses and investors, marking a shift from Labour's previous pessimistic messaging, though many of the proposed changes - including the Heathrow expansion - won't likely see results until 2040 or beyond.
What’s the story?
Rachel Reeves has shared Labour’s plans to deliver economic growth - which includes plans for a third runway at Heathrow airport and an “Oxford-Cambridge growth corridor” in an effort to create the “Silicon Valley of Europe”.
“I’ve always been clear that a third runway at Heathrow would unlock further growth, boost investment, increase exports and make the UK more open and more connected. And now the case is stronger than ever”, the Chancellor said.
A third runway at Europe’s busiest airport has been debated for decades and Reeves said the government cannot “duck the decision” any longer. She said the expansion will create 100,000 jobs and "unlock further growth, boost investment, increase exports and make the UK more open and more connected".
The decision is a controversial one, opposed by some for the knock-on effects it will have in air pollution, noise and disruption to local residents.
The Mayor of London, Sadiq Khan is opposed to the new runway for these exact reasons.
“Despite the progress that's been made in the aviation sector to make it more sustainable, I’m simply not convinced that you can have hundreds of thousands of additional flights at Heathrow every year without a hugely damaging impact on our environment,” he said.
Rachel Reeves lays out plans for economic growth, but will they work?
Reeves’ plan to get Britain building
Those concerned with environmental causes may be further dismayed at the Chancellor’s plans to reduce environmental requirements placed on developers when they pay into a nature restoration fund, which pays for projects such as tree planting and restoring waterways to tackle the nature emergency.
Reeves said she’s been “genuinely shocked” at how slow the planning process is when trying to build new infrastructure, and that developers shouldn’t have to worry about the “bats and the newts” - referring to previous development projects that were blocked to protect wildlife.
“Her diagnosis is that for too long, the British economy has been haunted by a lack of productivity growth, a lack of overall growth driven by the fact that it's almost impossible to build anything in Britain,” Lewis Goodall says.
“The infrastructure projects, the planning, all of these things make it really, really hard to deliver these things that will unlock the productive capacity of the economy over time.”
If Reeves is able to pull off some of the changes, Lewis adds it will be “generally transformative over the medium to long term”.
What’s The News Agents’ take?
The hour-long speech could hardly be billed as the most exciting political moment of recent times, not helped by Reeves being “not the greatest communicator,” Jon Sopel says.
Lewis agreed, saying the speech sounded “technocratic,” almost like a “civil servant type speech,” with Reeves giving micro announcement after micro announcement and saving the big news for the final quarter.
But the aim of the speech, The News Agents agree, wasn’t to appeal to voters - in that they have already succeeded. It was delivered in “some panic,” Lewis says, to appeal to British enterprises and investors.
Where Keir Starmer’s Downing Street garden speech back in August was, Jon says, “the epitome of doom and gloom, and we're all going to die, and it's all terrible,” and Reeves’ budget that followed delivered hard pills to swallow with national insurance rises for employers, this speech was a “course correction”.
That, Emily Maitlis believes, is a direct result of Donald Trump’s presidency and the language he tends to use.
“People don't want to have their greens and their porridge shoved down their throat and told how awful it's going to be,” she says.
The new Labour government was “taken aback by the extent to which their previous speeches did destabilise and undermine business confidence,” Lewis says.
“I think this was a speech aimed precisely at British enterprise, saying, ‘do not panic. Yes, there’s short term instability, but please, please, please invest here, and we've got a plan for you for that investment”.
But it is the long-term we are looking at when it comes to Reeves’ plans, as Emily notes, Theresa May had already passed legislation for a third runway to go ahead back in 2017.
“Just saying that the government supports it does not actually move things on substantially”.
“Most of the stuff Reeves was talking about today was stuff that will bear fruit in five, 10, 15 years,” Lewis says.
“Even on Heathrow, which she says she wants to expedite, we're talking about getting a consent order done by the end of the parliament. That's just a consent order. It's not the construction. We probably won't be there till 2040”.
He adds; “She is, in a wet way, in far less control over the short term economic picture. And there are fewer levers she can pull on the short term”.
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