Yesterday (23 September) chancellor Rachel Reeves and business and trade secretary Jonathan Reynolds offered unified messages on the need to drive investment into the UK and “rebuild” the economy for workers.
The need for Britian to become more self-reliant amid increasing geopolitical fragmentation was also noted, with Reeves announcing a plan to “get Britian building”.
They were speaking on the second day of the Labour Party Conference, which prime minister Sir Keir Starmer is due to speak at this afternoon.
Globalisation is dead
Reeves began by reflecting on the altered global landscape that the new Labour government must navigate, declaring that “globalisation, as we once knew it, is dead” and highlighting the consequences for global trade.
“Disruption to supply chains that span the globe has revealed the perils of prizing only the fastest and the cheapest.
“And our ability to make the things essential to our national security has been depleted.”
She said that this necessitates a new economic model: “securonomics”, which she described as the “government putting economic security first”.
She positioned the model as a response to increased geopolitical fragmentation and conflict in recent years, telling the audience that the UK must “rebuild” its ability to “make and sell here in Britain, so we are less exposed to global shocks”.
She confirmed that the government intends to publish initial plans for its much-anticipated industrial strategy alongside the Autumn Strategy on 30 October.
‘Get Britain building’
To support this aim she announced the party’s plan to “get Britain building” again, with a “once in a generation set of reforms” which will accelerate the construction of infrastructure needed for energy, transport and housing.
Listing projects from “battery factories, life sciences and 5G infrastructure”, she promised to overhaul a culture of “major government capital projects running over time, over budget and in danger of going undelivered”.
One area set to benefit is energy, with Reeves also announcing plans to liberalise energy infrastructure, with “competitive tendering” for new projects and an easier route to connecting the UK’s energy grid for new developments.
Among those bidding for contracts will be Labours nationalised “Great British Energy”, which Reeves said will create 200,000 jobs, lower energy bills and boost energy security.
Investment
She continued that, crucial to this plan and the success of the UK economy, is greater inward investment, which she said is vital to increasing competitiveness globally and ensuring shared prosperity domestically.
“It is investment that allows businesses to expand, create jobs and compete with international rivals, with new plants, factories and research labs coming to Britain – not Germany, France or America.”
She pledged that Labour will “restore investment as a share of GDP to the level it was under the last Labour government”, claiming this would add “an additional £50bn to our GDP every single year”.
Regional growth
She connected the UK’s newfound vulnerability on the international stage with regional disparities in the UK, adding that “great gaps have been allowed to open up between different parts of the country”.
Emphasising the need for wealth generation across the economy, for all workers, she stated that Labour would develop “an economy rebuilt in the interests of working people”.
Business
Reynolds hued closely to this line, setting out a “pro-business, pro worker platform”, designed to deliver change and improved living standards for working people.
However, he led with his stance on business and said that Labour needs to “work in partnership with business to bring about the change we need”.
Echoing Reeves, he added that “delivering” for the British people was not possible, “unless we turn around the low investment, low productivity, low growth economy which we have inherited”.
The party’s industrial strategy was later mentioned as being integral to this, enabling the UK to “win a great share of investment… [for] the industries that will contribute the most to our future growth”.
Small business
He also shifted his attention to small businesses, noting the barriers to growth that many face to growth.
Singling out the issue of late payments, which can be painfully disruptive to smaller business’ cash flow, he said that Labour has “taken the action needed to ensure companies pay on time”.
Last week (19 September), the government announced news measures to prevent late payments, including new reporting rules and “major” consultation, which are estimated to cost small businesses £22,000 per year.
Port Talbot
Pivoting to how his department will also be “pro-worker” he thanked unions Community, GMB and Unite for “working with me to improve the deal for the workforce at Port Talbot”.
The beleaguered Tata Steel plant has been fighting a move to electric arc furnaces, which will be less carbon intensive but require significantly less manpower. The second of the plant’s blast furnaces will close at the end of this month, leading to up to 2000 job losses.
In a speech which reiterated the government’s claims of severe economic mismanagement by the previous Conservative government, and a “£22bn black hole in the Treasury”, he said that:
“Together with the unions, we have done more for steel in two months, than the Conservative Party did in 14 years”.
Trade
Business, rather than trade, was the focus of Reynolds speech. However, he did reassert the PM’s position on a “reset” of relations with the EU, while pursuing other trade deals.
“[Delivering change] means having a trade strategy, that resets our relationship with the EU whilst also building new trade opportunities around the world.”
Chartered Institute response
Talking to City AM yesterday, the Chartered Institute of Export & International Trade’s director general Marco Forgione said he welcomed the update on the industrial strategy but urged the new government to ensure it caters for all sectors.
“The UK has an enviable position and recognition for its industrial manufacturing, but we are very much moving to a modern economy which is based on things like renewable energy, technology, high-value manufacturing, additive processing,” he said.
He added that the strategy needs to be “comprehensive” and should include the UK’s strong education system, including universities.
“We’ve got a challenge in the UK. We want to be a high-skill, high-value economy. We’ve got to make sure that we’ve got a university and education system which is delivering on that.”