Rachel Reeves put on a fiscal straitjacket, then spent her speech to the Labour party conference getting out of it
During the debates surrounding pandemic relief spending, arguments about deficit and debt were muted. The government could spend whatever it took without anyone claiming Britain might go bankrupt. Now that the country can see an end to the pandemic, the main political parties are returning to the politics of the deficit. Both the Conservatives and Labour have adopted fiscal rules that aim to limit government borrowing with arbitrary targets. Fetishising deficits is bad policy that can damage society.
In her first address as shadow chancellor to a Labour party conference, Rachel Reeves put on a fiscal straitjacket. She then spent her speech getting out of it. This was a good sign. Her plans to spend an additional £28bn of green capital investment each year until 2030 shows Labour will take the climate emergency seriously. By contrast the government is investing just £5bn annually, a quarter of what experts say is needed to hit net zero targets. In making a big spending commitment, Ms Reeves has put pressure on the government to set out a costed plan to meet its green pledges.
