In the past, the Mansion House speeches given by either the Prime Minister or Chancellor of the Exchequer have generally been big events.
Staged at the Lord Mayor’s official residence in the heart of the City of London in front of senior bankers and officials, it functions both as a state-of-the-nation economic address and a pointer as to where the Government wants to take its policy in future.
The most famous speech of this kind was that of William Pitt the Younger, when he told the Lord Mayor’s Banquet in November 1805, following the Battle of Trafalgar: “England has saved herself by her exertions, and will, as I trust, save Europe by her example.” That was it. He died barely two months later.
Last night Rachel Reeves was more forthcoming in her statement. There were lots of warm words and sentiment about deregulation and business being strangled by “red tape”, and plenty of that Thatcherite rhetoric we have all heard for many years.
I couldn’t agree with Reeves more on that front. Deregulation and low taxes do, whatever else people might say, lead to growth. I agreed with her when she said she wanted to “slash red tape”. It’s just that I have heard Treasury ministers, of whatever political stripe, saying that for 30 years.
It may seem strange that a Chancellor whose plans for spending restraint have effectively been shredded by left-wing MPs should be beating the Thatcherite drum on deregulation.
We shouldn’t judge Reeves for that, however. Tax options seem increasingly limited. Furthermore, she wouldn’t, in front of an audience of City grandees, be that open about tax increases, even if everybody thinks they are inevitable.
“Thank you, Lord Mayor; I fully intend to tax you and your fat cat buddies to the fullest extent.” She was never going to say that, was she?
So she skirted around the issue. Deregulation, getting rid of red tape, is now the order of the day. The august crowd, the bankers and insurers, the movers and shakers in that world, would have known that the Chancellor’s speech was a lesson in obfuscation.
They all know tax increases, potentially quite substantial ones, are on the way, and very likely at the autumn Budget. They would appreciate, nevertheless, the cloudy rhetoric which does not confront the facts squarely. Indeed, Reeves’s whole speech felt like a lesson in British understatement and politeness.
The Chancellor’s speech writers and advisers would have been asking themselves, and rightly in my view: what can the Chancellor say to appease and mollify that audience?
The communications people talk of “building bridges” to one’s audience. That was the one bit of media training I remember from being a junior minister.
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The Chancellor built bridges to her audience. I was somewhat surprised to hear that she believes “Britain cannot succeed and meet its growth ambitions without a financial sector that is fighting fit and thriving”. That sounded a lot like New Labour in 1998 or thereabouts.
She spoke warmly about financial services being “critical in people’s everyday lives”.
Then there were the platitudes: “London is home to the deepest equity capital market in Europe.” That has been true for at least 250 years. There is no question that London is the biggest stock exchange in Europe and will be for a long time.
The real competition, however, is global. New York, Hong Kong, even Shenzhen and Mumbai boast larger stock markets, by market capitalisation. That’s who London’s real competitors are.
The mood the Chancellor reflected would, I am sure, have sounded broad, inclusive and consensual to the audience last night. Yet, in the back of the minds of those bankers, there lurked the spectre of the Budget last autumn.
Then, £40bn of extra taxes were announced, mainly levied on businesses. The bankers would all have been wondering, how much will business be asked to stump up this time?
Of course, nobody would have been so impolite as to raise this issue directly, but I’m sure that is what a significant portion of the audience were thinking.
I am also sure they would have been terrified of the cry of the Labour left, most notably the former Labour leader Neil Kinnock, for a wealth tax on any assets over £10m. That is a lot of money, but to the plutocrats dining with the Lord Mayor last night it would not sound like a lot.
They would have been aware of the impact of the changes in the non-dom rules, brought in, unbelievably, by the Conservatives at the end of their 14 years in government.
And that, ultimately, will not have been assuaged by last night’s speech. Whatever else was said by Reeves – however much her speech tried to reach out to the City by appealing to its anti-regulatory instincts, however grand a bridge she attempted to build with plans to tear away red tape, however gushing the praise of London’s financiers – nothing can hide the central question of the much-predicted tax rises expected this November.
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