Chancellor of the Exchequer Rachel Reeves yesterday (Image: AP)
’ economic growth strategy is a recipe for disaster which will inevitably leave the UK in “lockstep” with the , and lagging behind the United States, a banking expert has warned.
Bob Lyddon also believes the Chancellor is planning to plough cash into seats in a classic example of what he called “pork barrel politics”.
Mr Lyddon, the founder of international banking consultancy Lyddon Consulting Services, was commenting on a package of investment reforms unveiled by Ms Reeves on Friday which she argued was critical to Labour’s “mission for growth”.
The announcement, , is the latest phase of the Government’s National Wealth Fund, an £8 billion public investment initiative aimed at driving growth, fostering green industries, and boosting employment.
It goes hand in hand with the newly created Office for Investment, intended oversee the strategic deployment of funds, attract private investment, and coordinate efforts to maximise the economic and social benefits of public spending.
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However, Mr Lyddon is deeply sceptical about both – and equally unconvinced by Ms Reeves’ latest idea.
He told Express.co.uk: “We must treat with derision the idea that Labour and mayors in West Yorkshire, Greater Manchester, West Midlands, and Glasgow know anything about business investment rather than about maxing out on spending.
“They have limited or no business experience and will delight in the popping-up of huge, new, and shiny ‘public assets’ within their domains, no matter that the assets fail to deliver long-term economic benefit.”
Mr Lyddon was also scornful of the Chancellor’s credentials, asking: “Who would now trust Rachel Reeves or any of her sidekicks, or any quango packed with Labour worthies, to pick the right sectors of the economy to invest in, and to support businesses that succeed?
“The working example in the UK for this type of business investment by Labour councils is Robin Hood Energy in Nottingham.”
The company, launched in 2015, was a not-for-profit energy company which folded five years later, racking up millions of pounds in debt in the process.
Former Labour Chancellor Gordon Brown (Image: Getty)
Mr Lyddon said: “Outside the UK it is Stalin’s White Sea Canal, a white elephant connecting nowhere to nowhere.”
Describing Ms Reeves’ vision of a partnership with regional mayors as another iteration of the tried-and-tested formula called “pork barrel politics”, he warned: “It will be a re-run of Gordon Brown’s Private Finance Initiative, which made schools and hospitals pop up in Labour areas at massive and continuing cost to all UK taxpayers, and in parallel Gordon Brown’s light-touch regulatory approach to the former building societies who were helping with the commercial and residential rebuilding of the UK’s rust belt.
“Anyone remember Halifax Bank of Scotland (Rachel Reeves ought to), Northern Rock, Bradford & Bingley, and Alliance & Leicester? The rest of us are only just finishing with paying off the bill.”
The new schemes envisaged by the Government were commonly referred to as “rentier business models”, Mr Lyddon said.
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Prime Minister Keir Starmer (Image: Getty)
He explained: “If you want to get from A to B, you must use the bridge and you must pay the toll, or ‘rent’.
“An economy in which such models predominate runs itself increasingly into the sand.
“The EU/Eurozone economy is already such an economy: we won’t need any reset to become just like them again, just to wait two or three years while Labour strut their funky stuff.
“The private sector ceases to be the economy’s engine: it is at best a trailer.
Bob Lyddon claims Rachel Reeves will leave the UK ‘in lockstep’ with Ursula von der Leyen’s EU (Image: Getty)
“All in all, a disaster for wealth creation and a guarantee that the UK and EU/Eurozone economies come into lockstep with one another in a form of three-legged race in which we all fall further behind the sprinting and unencumbered United States of America.
“Rachel Reeves will squander your cash and shackle the UK to Brussels. Where can we all get a Green Card?”
Speaking last week, Ms Reeves said: “At Davos I’ve been telling some of the world’s biggest investors that the U.K. is a safe bet for their investments, whether that’s in London or Leeds.
“And in our mission for growth, it’s critical that we are growing every region’s local economy, that’s why we are doing things differently.
“Those with local knowledge and skin in the game are best placed to know what their area needs, and our transformative reforms will put local leaders at the centre of a network that will connect them with investment opportunities, bringing wealth and jobs to their communities.”