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Rachel Reeves has warned that we’ve entered “an age of insecurity” – and she wasn’t referring to Keir Starmer’s precarious grip on power.
In declaring that “globalisation as we’ve known it is over” the Chancellor set out her response to this hard-edged new reality, focusing on regional growth, closer ties with the EU and a robust AI strategy.
The last of these is the most sensible, or at least it contains the most potential. The tech and AI community in the UK seems genuinely enthusiastic about the level of government support for critical AI infrastructure and areas such as quantum computing, and we should acknowledge the government’s ambition and commitment.
I’m afraid I’m less excited by the Chancellor’s proposals for ‘fiscal devolution’ which seems set to form a large part of her regional growth strategy. It boils down to letting mayors and local authorities ‘keep’ a proportion of the tax revenue raised in their patch. Reeves has promised more details in the Budget later this year, but we’d better hope it stops short of letting local authorities levy their own taxes.
Sliding back into EU’s regulatory orbit
The Chancellor seemed most animated when talking up closer ties with the EU, noting that “no partnership is more important than that between the UK and our European neighbours.” This is a political decision, one that Reeves acknowledges will require the government to “make and win” the argument.
She said yesterday that the UK should be prepared to “align with EU regulation” and that where “there are areas in which regulatory autonomy may be necessary” (AI, anyone?) that “should be the exception, not the norm.” In other words, Reeves wants regulatory alignment with the EU to be the default position – with our post-Brexit freedoms (far from maxed out) to be used only as “an exception.”
That’s a political comfort blanket masquerading as a pro-growth strategy.
What was missing from this speech was any acknowledgement that the country is suffering under a tax and regulatory regime that has grown out of control. Sloshing some more tax revenue around the country while sliding back into the EU’s regulatory orbit will do nothing to alleviate these burdens.
When Reeves talks of a ‘strategic state’ what she really means is a bigger, more expensive one. Despite some sensible moves on AI the philosophy behind the speech added up to an agenda that points in the opposite direction to the one we should be taking.