Andy Haldane, who left the Bank in 2021 and who advised Jeremy Hunt after the “mini Budget” on how to restore confidence in the UK economy, said the measures the Chancellor announced in her speech on Wednesday wouldn’t be enough.
He also added that Reeves’ doom mongering, with a focus on the disputed £22 billion black hole in the nation’s public finances, is “among the reasons why we snuffed out the growth in the first half of the year and we flatlined it in the second half”.
Reeves promised to go “further and faster” compared with previous governments in her speech in Oxfordshire earlier this week, after years of sluggish growth in the UK.
One way Haldane thinks Reeves could do this is to help older people stay in work for longer.
“After the age of 50, the rate of employment starts falling rapidly, despite the fact that people are living longer lives than ever.”
“That would deliver a huge benefit to the public purse and to growth. Ageing need not be a problem. It could actually be the opportunity of our lifetimes, if we seize it.”
Higher taxes, same public services
Is it too late for Labour to win the public’s trust on the economy? Mr Haldane doesn’t think so, but he added he would have done things differently were the Chancellor.
“As best we know from surveys of the public, they don’t mind paying the extra penny on their income if it can tangibly show up in better schools, better roads, and in better hospitals. There is legitimate sense of public services having got worse, despite the fact that the tax take is high and rising, and that is a problem”.
Labour ruled out raising any of the three most lucrative taxes – income tax, employees’ national insurance and VAT – in its general election manifesto, arguing that the burden on “working people” was already too high. But the party also pledged to improve the quality of services at the same time.
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Read MoreWork on a third runway at Heathrow Airport, which Reeves argued could create 100,000 jobs, is unlikely to see work complete until 2045. Some suggest it will be closer to 2050.
To do this, he suggests Government should work with local lenders to drive local growth that benefits smaller businesses and local people.
The current Government has ditched the phrase “levelling up” coined by the Conservatives under Boris Johnson, but insists it is still committed to reducing regional inequality despite announcing major projects in already prosperous areas.
Haldane was the author of the levelling up white paper published by Michael Gove in 2022, as well as advising the last Tory chancellor. But some of his public interventions have been seen as more left-leaning, including a warning that the West’s capitalist model needs a “fundamental rethink”.
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