The Good, the Bad and the Unrealistic in Rachel Reeves's second Mais lecture

One of the more puzzling complaints aimed at this Labour government is that it is unclear what it thinks about growth. The truth is quite the reverse. Chancellor Rachel Reeves has published as much on the topic as any predecessor, including now a second Mais lecture in two years. To anyone paying attention, what she thinks is pretty clear and consistent.

The problem, as we have argued at the Institute for Government, lies in the delivery of what is a perfectly standard and serviceable strategy, built around the high-level themes of Stability, Investment and Reform – all of which would have fit quite easily with the previous government’s approach. The challenge isn’t knowing (roughly) what to do, but in confronting and driving through the choices needed to do it, and facing the unavoidable political costs to doing so.

On the evidence of Tuesday’s lecture, Reeves has heard the message. Although Mais lectures are meant to be for theory and vision, this one was studded through with actual policy choices – filling in the spaces left behind by an extremely pared down spring forecast delivered just a fortnight before.  

The Good: some of Reeves’s choices are clearly the right ones

Two years ago, the IfG was encouraged by Reeves’s acknowledgement of the importance of devolution to growth – but wanted clarification of what this would actually mean. On Tuesday we got it. Regional leaders will gain a guaranteed share of central government tax revenue: what the chancellor described as “a permanent transfer of power and resources”. With more fiscal fuel, these regions are better able to choose the investments they need to improve their local area – and by having these revenues linked to their own economies, they might be encouraged to care more for boosting growth. Details are to follow, but this looks like a real shift in ambition, of just the kind the IfG has been calling for.

Another correct choice is a firmer commitment to mending fences with Europe. For a long while Labour politicians appeared terrified of sounding the least bit derogatory towards Brexit – absurd, when the evidence is mounting of the permanent damage it has done to the economy, and the public’s growing disdain for it. But high-level language about international partnership, closer alignment and working together needs to be followed up with some concrete steps and other choices: is Reeves suggesting voluntary alignment by the UK, or something more negotiated and structured, which will obviously need complicated negotiation with the EU? Whichever way the government goes, voters and businesses are yet to be warned of the possible downsides and loss of control, even if they are a price worth paying.

A further positive is the warm language towards London and the South-East. Even if the major focus is on lagging regions, growth is not a zero sum game, and a large chunk of the whole country’s recent weak performance stems from London and its vicinity no longer powering growth like before. If the problems in the lagging regions are about connectivity, it is congestion that needs addressing in the south, which Reeves has taken aim at with a firm commitment to support land acquisition and infrastructure in the high-potential space between Oxford and Cambridge. There is even a fierce vow to use compulsory powers if landowners are intransigent.

It was also encouraging to hear the chancellor talk with such ambition about the potential of artificial intelligence, “the defining technology of our era”, and back this support with what sounds like a holistic plan covering infrastructure, chosen areas of competitive advantage, talent, procurement and capital. But it is too early to give a verdict. Like everything in this speech, one might add caveats about the need for strong execution. Not much is proven by the mere announcement of AI summits, zones, strategies and so forth – Labour at times has been too enamoured of the idea of institutions as the general purpose technology to solve any problem; setting up an institute, council or fund for X does not ensure that X is going to happen.  

The significance, though, is the broadly positive direction of travel, given how so much political speech is normally allotted to the risks and costs of AI, and not its phenomenal productivity potential.

The Bad: Reeves ducked inevitable trade-offs

Reeves made a nod to such concerns, trying to reassure her audience that no one was going to lose out from the advent of AI. This is all of a piece with her steady espousal of “securonomics” as a supposed differentiator with the more heartless laissez faire of previous governments. If there is a weakness in the chancellor’s theory, it lies somewhere around here. Securonomics is described as “not a protectionist agenda”, but then a few sentences later as a policy that “takes an active interest in where things are made, and  who makes them”. The section on globalisation is similarly confusing – declared dead, and then in the same breath we are reminded of how we live in an interconnected world, where competitiveness, openness to trade and financial credibility remain critical. This felt like an instant reincarnation.

These ambiguities are not just a theoretical problem – it infects actual policy making. For all that the government backs the cause of economic dynamism, there is something reality-evading about Labour’s insistence that this can sit easily alongside greater security for all. Reality has a way of catching up. Recent unemployment figures are a sign of how governments do not get to have it all – in this case, higher pay, more job security, fiscal policy rebalanced towards investment AND rising employment, all at the same time.

For a speech that was otherwise frank and ambitious in exposing choices, the securonomics theme appears like an obfuscation, disguising a set of trade-offs that will have to be confronted sooner or later.

The unrealistic: the chancellor’s promises about the government’s AI strategy

Reeves’s promise that “every part of our strategy on AI is aimed at ensuring that our people have a share in the prosperity that AI can create” is likewise unrealistic – imagine, for a minute, that a Labour politician of the early 2000s had said the same thing about the Internet. Politically, she may have felt she had no choice; going back at least to the financial crisis, there has been a growing expectation that it is the job of governments to shield the public from change, no matter its cause or the costs of doing so. Everyone must be compensated for anything that happens. ⁴ https://www.economist.com/britain/2026/03/12/how-britain-became-a-compo-nation

This tendency reached its zenith in the economic earthquake of the pandemic, which was understandable – the government had days to decide on a policy for something not seen in a century. But if it now extends to every tremor and wobble stemming from the spread of innovation, it risks throwing sand into wheels where more oil is needed. Moreover – as both Labour and Conservative predecessors might tell her – the public has been oddly ungrateful for previous costly efforts to staunch the wounds of economic disruption. The Iran conflict and consequent energy price surge gives the government the chance to demonstrate a more discriminating approach.

Conclusion: Reeves’s consistency is admirable but tough choices are unavoidable

Rachel Reeves has been consistent in her economic approach despite scant reward in terms of immediately higher growth. When the government is so well known for its U-turns, this is an underrated plus – the last thing the country needed was a second Mais lecture just to amend the first. The theory of two years ago is beginning to crystalize into some more definite choices. There are going to need to be more.