I have spent most of my academic life at Cambridge trying to understand money and capitalism, especially in Britain where, as many others have argued, the exceptionally large scale and dominance of the financial sector has in various ways had a century‑long deleterious impact on the economy’s production of goods and services.
Rachel Reeves’s proposed deregulation will surely exacerbate the problem, as Larry Elliott has forcefully explained (Rachel Reeves is hoping deregulation will save the economy. We know how that ends, 16 July). She follows a long Labour tradition of thraldom to the City, ranging from Philip Snowden in the 1920s to Gordon Brown and Ed Balls. Only Harold Wilson understood the problem – too many people making money and not enough making things, but his production-focused Department of Economic Affairs withered and died in the battle with the City and its Treasury and Bank of England allies.
Of course, Keir Starmer and Reeves would face similar powerful barriers if they had the nous to embark on the creation of the necessary financial and administrative institutional reforms to foster economic growth, but they don’t. What appals, flabbergasts and saddens me is their woeful economic and historical ignorance, and utter lack of vision and imagination. It is pathetic for a Labour government to think that economic growth would be stimulated by further unleashing the already lightly regulated City.
Geoffrey Ingham
Emeritus professor of political economy, University of Cambridge
• Heather Stewart’s article making the case for wellbeing-focused policymaking (Why Labour should target happiness alongside economic growth, 13 July) contrasts sharply with the chancellor’s plans for City deregulation, underlining some outdated thinking at the heart of government.
In the aftermath of the last financial crisis, we saw the renowned economists Joseph Stiglitz, Amartya Sen and Jean-Paul Fitoussi make a conclusive case for governments to complement GDP data with better measures of social progress. In their words: “Wellbeing is important because there appears to be an increasing gap between the information contained in aggregate GDP data and what counts for common people’s wellbeing.”
Rachel Reeves’s reforms may or may not boost growth, but their success should not be assessed by that measure. Rather, all government policy should be evaluated against whether it delivers improved lives for citizens, especially those who have the least.
Adam Lang
Director of policy, insight and advocacy, Carnegie UK
• Rachel Reeves is setting herself up as “George Osborne lite”, bowing to the City regardless of the people who voted Labour. She is dodging two huge problems with the UK taxation system. Business rates and council tax are both dysfunctional, being set up decades ago when finance operated differently.
Business rates are based on rentable value and take no notice of the profits made from retail warehouses like Amazon. Council tax is based on bands of value set years ago and only tinkered with since. The owner of a multimillion-pound mansion pays the same as a four-bedroom house in the centre of London. When will we see these problems tackled?
Jem Moore
Bath
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