The new shadow chancellor, Rachel Reeves, intends to consult Joe Biden’s economic team on how Labour can make a major economic offer before the next election, rooted in job security, childcare and social infrastructure.
The party has suffered a bruising week of infighting, criticism of Keir Starmer’s leadership and questions over the party’s values, which both Starmer and Reeves will be called on to address in the coming months.
Reeves, Starmer’s closest ally who replaced Anneliese Dodds as shadow chancellor, will consult on how Labour can harness similar momentum to Biden’s Democrats with a bold economic offer that appeals to both blue-collar voters and urban graduates.
Reeves has already had offers of introduction to counterparts in Washington and also intends to talk to the economist Mariana Mazzucato, the author of leading work on building back state capabilities to take on big missions that both rival and work alongside the private sector, so governments can tackle existential challenges such as climate change, ageing populations and global health threats.
Biden’s $1.4tn (£1tn) stimulus package paid $1,400 into the pockets of low-paid workers and members of their families, and will fund key measures on childcare and unemployment relief which are expected to increase the incomes of the poorest fifth of US households by 20%. The US economy is currently at pre-pandemic levels, whereas the UK economy is still 10% smaller.
Reeves will underline over the coming weeks that the UK is experiencing a slower recovery and that countries such as the US are growing not just because of government handouts but because of building equality and social justice into their economic models.
“He is using this moment to get the economy going but in a way that addresses deep-seated inequalities. Those same inequalities have been exposed here, people from lower income backgrounds, in insecure work, with underlying health conditions, have been at high risk. But there is nothing from the government that deals with those fundamentals,” a source close to Reeves said.
She will highlight the fact that the most costly government measures in the last budget involved support for businesses – the £25bn super-deduction tax break – whereas in the US equivalent sums have been used to alleviate poverty. She will also contrast the Conservatives’ much vaunted efforts on infrastructure projects with the need for social infrastructure such as social care and childcare.
Reeves is understood to want to refocus Labour’s message on work, family and place, values referenced by Starmer but viewed with suspicion by the party’s left, which has accused the leadership of attempting to use hollow patriotism to appeal to the working class.
Reeves’ view, however, is that Labour should speak about place as a connection to where people grow up, an understanding that many people would choose to stay in the place they grew up and close to family and community ties if the right jobs existed.
She will also draw on the experiences of those who have left places where they were born – urban graduates are fast becoming Labour’s key voter base – and the struggles they encounter with housing, childcare costs and lack of access to the environment.
She also intends to renew focus on the fallout from the Brexit deal, a subject that has been thorny for Labour to tackle.
The party will begin to take bolder steps to highlight how significantly trade has fallen with the EU but has not improved elsewhere, falling 18% in the first quarter and rising by just 0.4% elsewhere in the world, as well as the new burdens Brexit has placed on key UK industries.