It’s like she’s woken up out of a dream or something. Actually, that’s pretty much what’s happened.
Like everyone else in Keir Starmer’s Labour, Reeves thought the whole point of government was to tax stuff and spend it.
Reeves is the first front bencher to realise the economy doesn’t work like that.
The nation needs capital to grow, billions and billions of it. All she’s done so far is scare it overseas where it can get a better return.
In desperation, Reeves is trying to breathe life into an old idea that she hopes will raise tens of billions to invest in UK infrastructure and growth.
As the economy slips towards recession or worse, she has to get this right. An awful lot depends on it.
Effectively, Reeves is taking a big gamble on the future of this country.
As if that wasn’t worrying enough, she’s doing it with the money sitting in our pension schemes. So it had better work or we’re in double trouble.
On Wednesday, Reeves will announce plans to unlock tens of billions of surplus cash sitting in our gold-plated workplace defined benefits schemes, better known as final salary pension schemes.
Companies need these surpluses in their to pay their members’ pensions for decades to come. It gives them a cushion in case the stock market plunges.
So this a big deal.
The surplus has been estimated at anything between £60billion and £100billion.
Instead of sitting in low risk bonds, getting a relatively low rate of return, Reeves plans to release this money and put it to work.
She wants to invest it in British business and infrastructure.
The so-called “surplus release plan” could be included in an upcoming pension schemes bill.
This is part of a wider set of reforms initiated under the last government and now being accelerated by Reeves.
Or to put it another way, she’s resorting to nicking ideas from the hated Tories. Weren’t they supposed to be incompetent and useless?
Given that she has no decent ideas of her own, that’s probably a good thing.
It sounds good in theory – big institutions don’t invest enough in the UK. In other countries, it’s the norm.
But it’s also risky, because there’s a reason institutions haven’t invested in the UK. The returns haven’t been good enough.
Yet it’s hard to argue against the plan in principle. Australia and Canada force their pension schemes to invest heavily in domestic infrastructure. Why not us?
Investing pension scheme funds should deliver a better return then leaving those big surpluses sitting in bonds. But we’ll have to watch Reeves carefully.
As yet, we don’t know how much oversight pension trustees will have over how the money they are responsible for is invested.
Or how much politicians will meddle in the process. The last thing we wanted is Westminster picking winners. It’s never worked before.
If it’s going to be used by Labour to pursue pet projects, then we might as well put the cash on a bonfire. Especially if Energy Secretary Ed Miliband gets involved.
Reeves has done nothing but destroy wealth so far. I’m worried about letting her loose with millions of people’s pensions too. As well those who remember the damage former Labour chancellor Gordon Brown inflicted on final salary schemes.
