Chancellor Rachel Reeves is taking a huge punt on growth and it had better pay off (Image: Getty)
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 ‘s party, Reeves thought the whole point of government was to tax stuff and spend it.
Reeves has belatedly realised that 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, she has to get this right. 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. If she fails we’re in double trouble.
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On Wednesday, Reeves will announce plans to unlock tens of billions of surplus cash sitting in our workplace defined benefits schemes, better known as final salary pension schemes.
Companies need these surpluses as a cushion so that they can keep paying pensions to members even when the stock market is volatile.
So this a big deal.
We’re not talking about loose change either. The surplus has been estimated at anything between £60billion and £100billion.
Today, it’s mostly sitting in low-risk bonds, where it’s getting a 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.
It’s part of a wider set of reforms initiated under the last government and now being accelerated by Reeves.
Which means she’s resorted to nicking ideas from the hated . Weren’t they supposed to be incompetent and useless?
Given that Reeves has no decent ideas of her own, that’s probably a plus.
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It sounds good in theory – big institutions don’t invest enough in the UK. In other countries, it’s the norm.
Australia and Canada force their pension schemes to invest heavily in domestic infrastructure. Why not us?
So it’s hard to argue against the plan in principle. It’s the practice that worries me.
We’ll have to watch Reeves and Labour very carefully.
If they end up meddling in the process, and deciding where the money is invested, it’ll end in disaster.
The last thing we wanted is Westminster picking winners. It’s never worked before.
If Energy Secretary Ed Miliband has any say over where the money goes, we might as well throw the cash on a bonfire.
Reeves has done nothing but destroy wealth so far. I’m worried about letting Labour loose with our pensions too.