Rachel Reeves Goes for Growth as UK’s First Female Chancellor

(Bloomberg) -- The UK’s first female Chancellor of the Exchequer, Rachel Reeves, had an early taste for breaking glass ceilings.

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Growing up in south London in Margaret Thatcher’s Britain of the 1980s, the state-educated girl who would rise to become the nation’s finance minister took pride in beating all-comers — mostly boys who went to fee-paying schools — in local chess tournaments. “There was a lot of snobbery,” she recalled years later. “I was just as good as them and I was going to prove it.”

It’s that drive that has taken Reeves, 45, from a comprehensive school in Beckenham to 11 Downing St. as the first woman to take charge of Britain’s finances following the Labour Party’s landslide win in Thursday’s general election.

She inherits from the outgoing Conservatives an economy with sluggish growth, debt at near 100% of gross domestic product and the highest tax burden in 70 years.

“I am under no illusions about the scale of the challenge that I will inherit,” Reeves told the BBC in an interview shortly after the election campaign began. “We have to make difficult decisions.”

The new occupant of No. 11 knows that some of her calls won’t be popular, especially with the Labour left. After years of Tory austerity policies, some more activist members want to see her loosen the Treasury purse strings and pour cash into Britain’s buckling public services.

Instead, Reeves and Labour leader Keir Starmer have spent the past three years trying to reassure businesses and the financial markets that the party has moved on since the left-wing leadership of Jeremy Corbyn, and won’t revert to the tax-and-spend policies traditionally associated with the party.

The duo has ruled out increases in income tax, national insurance, value added tax and corporation tax — the Treasury’s four main revenue raisers. They’ve said none of their plans require any other taxes to rise, and have promised to adhere to fiscal rules ensuring debt is projected to fall over time.

“My No. 1 commitment is to bring stability back to the economy,” Reeves told the BBC.

Reeves’s affinity with numbers began early. Born in Lewisham, south London in 1979, the daughter of teachers attended a local state school, where she was a self-confessed “geek” who would set her little sister, the now Labour politician Ellie Reeves, extra maths homework. She took the SAT exams voluntarily, for “the fun” of seeing how well she could do, and penned letters as a precocious teen to London’s Evening Standard newspaper. She won her first chess tournament at the age of 7 and became a national champion at 14.

The poor physical condition of parts her school — which had some pre-fabricated huts — was an early catalyst for her politics, and while her government brief will be to manage the country’s finances, she has said the area of government she cares most passionately about is education.

Labour has been in Reeves’s family for generations: When she was young, her father pointed to former party leader Neil Kinnock on television and told her “that’s who we vote for.” Her grandparents were Salvationists, who moved to Kettering, central England in the 1930s to find factory work. Reeves has spoken about her grandmother’s breathing problems from inhaling glue while making shoe laces.

“The Labour Party was formed by people like them and for people like them,” she has said of her grandparents’ struggles. “It’s got to be the voice for those people.” She joined the party when she was 17.

The future chancellor’s diligence at school paid off in exam results that earned her a place at the University of Oxford, where she studied politics, philosophy and economics, the degree course that’s launched the career of many British politicians, including three Tory prime ministers in the past decade: David Cameron, Liz Truss and Rishi Sunak.

After graduating in 2000, Reeves had a job offer from Goldman Sachs. Instead, she opted to work for the Bank of England, saying later that she’d turned down the offer of more money to do something “a bit more useful.”

Reeves worked for six years as a BOE economist in the boom years leading up to the financial crisis, including a secondment to the British Embassy in Washington, where she met her husband, Nick Joicey, a senior civil servant who also served as a speech writer to Gordon Brown when he was chancellor. The couple have two children.

In the 2005 election, Reeves stood for Labour in the Tory safe seat of Bromley and Chislehurst, finishing a distant second. She stood there again in a by-election a year later, coming fourth. She then moved to Leeds, taking a job at the banking giant HBOS Plc just before it collapsed in 2008, leading to a takeover by Lloyds Banking Group Plc.

Earmarked as a “rising star” of Labour even before entering Parliament, Reeves in 2010 finally found political success, winning Leeds West for Labour just as the party was ejected from government. Within a year, she was in party leader Ed Miliband’s shadow cabinet, first as the number two on the finance brief, and then taking charge of the work and pensions portfolio.

In 2013 she hit the headlines after a journalist accidentally tweeted that she’d been “boring, snoring” in an interview. She later told the Guardian she had felt “humiliated” and that an ability to “add up the numbers” was more important in her job than displaying “a fantastic sense of humor or great wit.”

Reeves has described the 2010 to 2015 period of opposition as a “whirlwind” of speeches and policy interventions, and as late as the night of the 2015 general election, she and her colleagues believed they were heading into government. The ensuing defeat scarred her, contributing to Labour’s more cautious strategy in the run-up to Thursday’s vote, as party chiefs sought to avoid giving their opponents an opening.

When Corbyn was elected Labour leader, Reeves — a party moderate - returned to the back benches, making it clear she wouldn’t serve in his team. She used her time writing economics pamphlets and a book on Women in Westminster, and chairing the business select committee.

In that role, she led an inquiry into the collapse of Carillion Plc, which left thousands of people without jobs, hit the pensions of tens of thousands more, and forced the government to step in with emergency funding to salvage contracts affecting schools, hospitals, roads and military facilities. Reeves has described the probe as the “most politically formative period” of her life.

Two election defeats later, Starmer was elected Labour leader in 2020, and Reeves returned to the shadow cabinet, first as shadow cabinet office minister, before earning promotion to shadow chancellor in 2021. Since then, her goal has been to restore trust in the party’s economic approach, including wooing businesses over her famous breakfasts of salmon and scrambled eggs. She frequently reminds colleagues that Labour has only ever won elections when it polls better than the Tories on economic credibility.

While her refusal to approve policies that require big spending pledges earned her the nickname the “no machine” from fellow shadow ministers, it’s clear her approach has paid off, with voters now trusting Labour more than the Tories on the economy.

However, economists, including at the Institute for Fiscal Studies, have accused both parties of maintaining a “conspiracy of silence” over the need for billions of pounds of either tough spending cuts or tax increases post-election.

The former child chess champion has spent her life trying to prove people wrong, and is now banking on generating growth to be able to pursue Labour priorities.

“We’re not going to be able to put everything right that the Conservatives have done straight away,” she told the BBC, adding that she wants to “turn this economy around so it actually works for working people in our country again.”

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