| Chancellorship of Rachel Reeves | |
| Term Start: | 5 July 2024 |
| Party: | Labour |
| Appointer: | Charles III |
| Nominator: | Sir Keir Starmer |
| Seat: | 11 Downing Street |
| Predecessor: | Jeremy Hunt |
Rachel Reeves became Chancellor of the Exchequer on 5 July 2024, upon her appointment by Prime Minister Keir Starmer, following Labour's victory in the 2024 general election. She succeeded Conservative chancellor Jeremy Hunt, and became the first woman to hold the office of Chancellor in its 708-year history.[1]
In this role she has adhered to "modern supply-side economics", an economic policy that focuses on infrastructure, education and labour supply by rejecting tax cuts and deregulation. It is heavily inspired by Joe Biden's economic policy, particularly his Inflation Reduction Act. She coined the term securonomics in 2023 to refer to her version of this economic policy.
See main article: 2024 United Kingdom general election. Rachel Reeves was appointed Shadow Chancellor in May 2021, following a shadow cabinet reshuffle.[2] Over her three years in office, Reeves proposed to scrap tuition fees, no re-introduction in a cap on bankers' bonuses, and a plan to nationalise the railways.[3] [4]
Since 2022, Reeves has adhered to "modern supply-side economics", an economic policy which focuses on infrastructure, education and labour supply by rejecting tax cuts and deregulation.[5] [6] In May 2023, Reeves coined the term "securonomics" to refer to her version of this economic policy, originally in a public address at the Peterson Institute for International Economics.[7] [8] It is heavily inspired by US president Joe Biden's economic policy, particularly his Inflation Reduction Act.[9] [10]
Securonomics is based on the belief that globalisation has failed to achieve its stated aims and that economies in the Western world must adapt in response.[11] It would involve a productivist "active state" taking a more active role in managing the free-market economy, boosting production and drawing up industrial policy, stronger supply chains, and more economic cooperation with international allies with similar economic goals. Reeves believes that the active state is part of an "emerging global consensus" led by Biden's administration which will replace the neoliberal economic consensus, and that economic policy must be driven by the need for security.[12]
In an interview with the Financial Times in May 2023, Reeves said securonomics had to be based on "the rock of fiscal responsibility". She said her proposed £28 billion climate investment plan, Labour's version of the Inflation Reduction Act, had to "fit within her fiscal rules". In June 2023, the investment plan was revised to a gradual roll-out where the annual investment would rise gradually to £28 billion by around 2027.[13] [14] She argued that following the economic impact of the 2021–2023 global energy crisis, food price crisis and the Truss government's "mini-budget", the plan "will only be possible if we have an iron grip on public spending and tax receipts". The New Statesman reported that in an interview Reeves said "a Labour government would not introduce annual wealth and land taxes; raise income tax; equalise capital gains rates and income tax; rejoin the European single market and customs union; change the Bank of England's inflation target and reform its rigid mandate; or take private utilities into public ownership, except for the railways".
Reeves was appointed Chancellor of the Exchequer by Prime Minister Keir Starmer on 5 July. She became the first woman to hold the office of Chancellor in its 708-year history.[1] On taking office Reeves has said that since there is "not a huge amount of money" the focus will be on unlocking private-sector investment, as she believes "private-sector investment is the lifeblood of a successful economy."[15] [16] She made her first statement as Chancellor two days later, announcing measures to grow the economy. Reeves also announced her first budget would be released later in the year in the autumn.[17] [18]
In July 2024, Reeves announced a new £7.3bn National Wealth Fund to decarbonise Britain's heavy industry, which would be disbursed by the UK Infrastructure Bank over five years.[19]
On 29 July 2024, Reeves conducted a spending review, arguing there was a need to make "necessary and urgent decisions" because of an "unfunded" and "undisclosed" overspending of £21.9bn by the previous Conservative government. Among the decisions she made were to axe winter fuel payments for pensioners not receiving pension credit (roughly around 10 million people), announcing the cancellation of several infrastructure projects, and selling surplus public sector buildings and land.[20] Shadow Chancellor Jeremy Hunt dismissed her claims as "spurious", and argued that details of all government spending had been released by the Office for Budget Responsibility.[21] [22] During a subsequent appearance on Sky News, Reeves accused Hunt of "knowingly and deliberately" lying about the state of public services during the election campaign. In response, Hunt wrote to Cabinet secretary Simon Case, who heads the civil service, to dispute Labour's claims and request an "immediate answer" to "conflicting claims" that risk "bringing the civil service into disrepute".[23]
In a bid to halt strike action, the government offered junior doctors in England a two-year pay deal worth 22% on average.[20] Reeves scrapped the previous government's plan to sell shares to the general public in NatWest Group, but stated that the government still intended to fully dispose of its shareholding by 2025–26.[24] [25]
See main article: October 2024 United Kingdom budget. On 29 July, Reeves confirmed 30 October as the date of her first budget statement.[26] Speaking to The News Agents podcast the day after the spending review, she said the UK government would likely have to raise some taxes at the forthcoming budget in October.[27]