Rachel Reeves distances herself from New Labor's economic record

Rachel Reeves says that while Tony Blair presided over a decade of sustained economic growth and stability, his economic policies were built on «narrow» principles. 39; this led to further problems. Photo: Stefan Rousseau/PA

Rachel Reeves has sought to distance herself from New Labour's economic record, criticizing her predecessors for failing to address some of Britain's biggest weaknesses.

The shadow chancellor said Tony Blair, the former prime minister, failed to regulate the financial sector sufficiently and allowed globalization to increase inequality.

Speaking at Bayes Business School in the City of London on Tuesday evening, Ms Reeves said that while Sir Tony had presided over a decade of sustained economic growth and stability, his economic policies had been built on «narrow principles» which had led to further problems.

New Labor came to power with a landslide victory in 1997, but by the time the Tories took power in 2010, Britain was already reeling from the global financial crisis.

Ms Reeves said: “An under-regulated financial sector can generate enormous wealth, but it also creates deep structural risks. And globalization and new technologies can both widen and reduce inequality, disempower people as well as liberate them, displace them, and create good jobs.”

Rachel Reeves said Tony Blair and Gordon Brown had failed to adequately address low productivity and regional inequality. Photo: Johnny Eggitt/AFP via Getty Images

Although New Labor boosted economic security through a new minimum wage, Mr Blair and Gordon Brown, his chancellor, had failed to adequately address low productivity and regional inequality, Ms Reeves said, adding that problems «persist as and a festering rift between much of the country and Westminster politics.»

Flaws in economic planning were laid bare by the credit crunch, she added, saying: The «Great Moderation» could not last and as the global financial crisis unfolded , and these weaknesses were exposed.»

Her comments came after she drew criticism from the Labor left after comparing the challenges facing the next government to those faced by Margaret Thatcher.

The Shadow Chancellor claimed Britain was facing a «1979 moment» — referring to the year Thatcher took office, but left-wing activists within her party demanded a «real break with Thatcherism».

She promised to «tightly link» economic growth to future financial developments, giving the Treasury's Enterprise and Growth Unit a greater role in policy making, while signaling that she and Sir Keir Starmer had abandoned Jeremy Corbyn's economic outlook.

< p>Martin Abrams, a spokesman for the left-leaning campaign group Momentum, said: “The Labor leadership is proving once again that it is out of touch with the Labor movement and Labor values.”

The Thatcher government did not do this. will lead to “national renewal” but will instead lead to suffering for millions of workers and growing inequality.

“As we are now witnessing the exhaustion of the Tory ideology of privatization and financialisation, Labor must propose a real break with Thatcherism and popular program based on public ownership, public investment and wealth taxes.»

Richard Leonard, SNP Labor MP for Central Scotland, accused the party's national leadership of “rewriting history.”

“In the 1980s, manufacturing was destroyed, factory after factory closed, privatization was thwarted, unemployment has soared, profits have soared, the wage share has fallen, the rich have gotten richer and inequality has soared,” Mr Leonard said. “No rewriting of history. Thatcher didn't renew the economy, she destroyed it.»

The backlash came despite Ms Reeves rejecting Thatcherism elsewhere in her speech, promising an approach «not like the 1980s» and instead declaring that «growth in the coming years must be broad, inclusive and sustainable.»

Unite, Britain's second-largest union, which has given Labor millions of pounds in recent years, accused Ms Reeves of indulging in «false fiscal rules» and warned that she would «end up in a straitjacket the shirt you made.”

Sarah Graham, Unite general secretary, said: “Only sustained, long-term public investment in our crumbling infrastructure can turn the tide. It's time for Labor to come up with a plan for the real economy, not the big business lobby.»

Sir Keir sparked a similar reaction among the Labor left after a December article in The Telegraph praised him. at Thatcher for making «meaningful changes» as part of an attempt to attract Tory voters.