Will Labour listen to plea from economists to reverse Tory tax cuts? Don’t bank on it

Labour still needs to win the confidence of a nervous electorate, says Sean O’Grady

Keir Starmer and Rachel Reeves, the key figures behind Labour’s economic policy (Getty Images)

Alarmed at the increasingly ardent devotion to economic orthodoxy by Labour leaders, some 70 eminent economists have written to implore Keir Starmer to think again. The academics –  all respected, and some with a long association with the left – warn that Labour’s fiscal policy will damage the economy and the social fabric of the nation, and will “deepen the poverty and hardship many are already facing”.

Why are they concerned?

In recent weeks Rachel Reeves, shadow chancellor, has indicated that she will not reduce Tory cuts in child benefit, and has more or less ruled out a raft of potentially redistributive tax measures such as hiking capital gains tax. The substantial spending and borrowing proposed in Labour’s Green New Deal has also been scaled back. She also seems set to adopt Tory spending plans and fiscal rules. As a Bank of England-trained economist she is as keen as any of her Labour predecessors to reassure the capital markets that the party can be trusted. Innovation might be in order, but experimentation definitely not. If successful, she will be the most ‘small-l’ Labour chancellor since Philip Snowden, a flinty deflationist,  betrayed his party in the slump of 1931. Starmer is closer to Reeves than anyone else in the shadow cabinet and is inclined to defer to her judgment.