Rachel Reeves Has Quietly Ended the Thatcherite Consensus and Opened the Door to the UK Becoming a Nordic-Style Economy
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It's gone little-noticed by the media, but this week's Spending Review from the Chancellor made a series of changes, which amount to a fundamental rejection of the Thatcherite economic model Britain has operated under since the 1980s.
Buried in the report is the news that Starmer's Government is planning to increase the funding (or 'capacity' in the jargon) of a swathe of public-sector financial institutions - including some new ones launched by this Government.
"The Government is fostering an entrepreneurial state, which will support business investment and catalyse growth. FTs [financial transactions] allow [the] Government to invest alongside the private sector, through equity investments, loans and guarantees" the document states.
This may sound dry, but it opens the door to the UK becoming a much more activist state, something we'll see much more of through ministers' (long-awaited) national industrial strategy likely to come out in the next couple of weeks.
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The language of the Spending Review gives a taste of what's to come: "The Government's fiscal rules recognise financial assets held by Government, encouraging investments that support growth while generating a return for the Exchequer, [will be] delivered largely through expert public financial institutions including the National Wealth Fund and British Business Bank."
Rachael Reeves' changes to fiscal rules - now much looser than first indicated when the party entered office - also allow much more scope for an activist, investing state than before, because her new measure of national debt places much greater value on assets held by the state - such as public-sector stakes in private firms.
The previous rules, the Institute for Government notes, "meant that the Government could appear to improve public indebtedness by selling off these kinds of long-term assets, even if it did so at below their true market value. This created an incentive for Governments to game the rules by, for example, selling the student loan book - as happened in 2017."
A major incentive for privatisation has gone, because the rule-book now properly values investments held by the state, not as liabilities, but as assets.
The changes have led to the new Government increasing the financial firepower of publicly-owned financial institutions by around £40 billion - or 40% - this Parliament, to £137 billion.
UPDATE
The 'Millionaire Exodus' the UK Media Told You About Never Actually Happened
The equivalent of 30 stories a day were published about an exodus of wealthy people that a new study finds was "non existent"
Josiah Mortimer
Rachael Reeves will want to be remembered for this - her desire to "foster an entrepreneurial state" (my italics). In other words, to Scandi-fy the UK economy. More Norway, less USA.
The Government will now proudly expand "equity investments, loans and guarantees" - for example.
There are a few public-sector firms which will be pivotal to this mission. And the big-hitters are perhaps unexpected.
One new publicly-owned institution has received a lot of attention. Great British Energy - energy sec Ed Miliband's beloved creation - is launching with £4 billion capacity to invest in (and build) renewable energy projects across the country. Public fundin...
For digital and print editions, packed with exclusive investigations, analysis, features, and columns….
SUBSCRIBE
It's gone little-noticed by the media, but this week's Spending Review from the Chancellor made a series of changes, which amount to a fundamental rejection of the Thatcherite economic model Britain has operated under since the 1980s.
Buried in the report is the news that Starmer's Government is planning to increase the funding (or 'capacity' in the jargon) of a swathe of public-sector financial institutions - including some new ones launched by this Government.
"The Government is fostering an entrepreneurial state, which will support business investment and catalyse growth. FTs [financial transactions] allow [the] Government to invest alongside the private sector, through equity investments, loans and guarantees" the document states.
This may sound dry, but it opens the door to the UK becoming a much more activist state, something we'll see much more of through ministers' (long-awaited) national industrial strategy likely to come out in the next couple of weeks.
ENJOYING THIS ARTICLE? HELP US TO PRODUCE MORE
Receive the monthly Byline Times newspaper and help to support fearless, independent journalism that breaks stories, shapes the agenda and holds power to account.
PAY ANNUALLY - £39.50 A YEAR
PAY MONTHLY - £3.75 A MONTH
MORE OPTIONS
We're not funded by a billionaire oligarch or an offshore hedge-fund. We rely on our readers to fund our journalism. If you like what we do, please subscribe.
The language of the Spending Review gives a taste of what's to come: "The Government's fiscal rules recognise financial assets held by Government, encouraging investments that support growth while generating a return for the Exchequer, [will be] delivered largely through expert public financial institutions including the National Wealth Fund and British Business Bank."
Rachael Reeves' changes to fiscal rules - now much looser than first indicated when the party entered office - also allow much more scope for an activist, investing state than before, because her new measure of national debt places much greater value on assets held by the state - such as public-sector stakes in private firms.
The previous rules, the Institute for Government notes, "meant that the Government could appear to improve public indebtedness by selling off these kinds of long-term assets, even if it did so at below their true market value. This created an incentive for Governments to game the rules by, for example, selling the student loan book - as happened in 2017."
A major incentive for privatisation has gone, because the rule-book now properly values investments held by the state, not as liabilities, but as assets.
The changes have led to the new Government increasing the financial firepower of publicly-owned financial institutions by around £40 billion - or 40% - this Parliament, to £137 billion.
UPDATE
The 'Millionaire Exodus' the UK Media Told You About Never Actually Happened
The equivalent of 30 stories a day were published about an exodus of wealthy people that a new study finds was "non existent"
Josiah Mortimer
Rachael Reeves will want to be remembered for this - her desire to "foster an entrepreneurial state" (my italics). In other words, to Scandi-fy the UK economy. More Norway, less USA.
The Government will now proudly expand "equity investments, loans and guarantees" - for example.
There are a few public-sector firms which will be pivotal to this mission. And the big-hitters are perhaps unexpected.
One new publicly-owned institution has received a lot of attention. Great British Energy - energy sec Ed Miliband's beloved creation - is launching with £4 billion capacity to invest in (and build) renewable energy projects across the country. Public fundin...
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