Every year the Mais lecture, hosted by Bayes Business School, gives its speaker a chance to lay out their vision for the economy. It’s how we knew Rishi Sunak would prioritise fiscal prudence over tax cuts long before he entered Number 10. Last night it was Rachel Reeves’s turn.

The message seemed to be: build up the state to get it out of the way

As expected, there were no big policy announcements about what Labour might do in power. But that wasn’t the point of the speech. Reeves formally committed to keeping Jeremy Hunt’s fiscal rule, to get debt falling as a percentage of GDP in a rolling five-year forecast. This development would keep the spending reins tighter than many in her party would like, but on the flip side would allow her to potentially borrow more in other years, adding more to the national debt.

Reeves also clarified for her business audience exactly what her party means by ‘basic rights from day one’ for workers. This question spiralled for Labour earlier in the year when there seemed to be internal dispute about just how far these rights would extend. According to Reeves’s speech, they would mean ‘protection from unfair dismissal, sick pay, and parental leave. But this will not prevent fair dismissal, and we will ensure that businesses can still operate probationary periods with processes for letting go of new hires.’

That is largely the extent of the announcements. The rest of the hour-long speech was an opportunity to get some insight into how the shadow chancellor thinks – and what she believes creates economic prosperity. Here is what we learned.

Reeves broke down her lecture into three themes, or ‘imperatives’: stability, investment and reform. The first two areas played heavily into her philosophy of ‘securonomics’, a phrase the shadow chancellor coined last spring in Washington DC, in an attempt to draw a connection between Labour and Joe Biden’s economic strategy of protection and investment. The word has broadly come to be synonymous with a more active state and more capital spending, but last night Reeves went into more detail than she has before about what ‘securonomics’ means in practice.

For Reeves, it is a hands-on rebalancing between market forces and state control, tipping more power towards the latter. Reeves is presenting the age-old ‘freedom versus security’ debate in economic terms, asking us to give the latter a try. ‘Governments and policymakers are recognising that it is no longer enough, if it ever was, for the state to simply get out of the way, to leave markets to their own devices and correct the occasional negative externality’ she told the City. ‘Recognising that the security and prosperity of working people is integral to the strength, dynamism and legitimacy of a market economy.’

This idea of ‘guaranteeing stability’ – that there should be a certain level of economic protection every worker can count on – was emphasised multiple times in her speech. It could almost be described as a ‘too big to fail’ policy, but for the opposite end of the economic spectrum. Reeves was aware her emphasis on security would be seen by some as greater calls for protectionism, insisting there was a fine balance to be drawn. ‘The truth is, in recent years, we have become at once too open – too exposed to global disruption – but also too closed to global trade,’ she said, calling for ‘appropriate balance between openness to global trade and resilience at home’. This is not some radical lurch to left-leaning economics, she insisted, but rather the ‘Washington DC consensus’ that Reeves believes is ‘is in our interest to embrace.’

Having just experienced an inflation crisis, which spurred on a wider cost of living crisis, this kind of promise of economic security will no doubt be appealing to voters. But is the kind of security Reeves spoke about last night really achievable?

The shadow chancellor acknowledged the role ‘geopolitical stability’ plays in the health of the UK economy, insisting that the country can ‘no longer indulge complacency’ that external factors will work in favour of getting Britain’s economy growing. But perhaps in quiet acknowledgement that there is only so much a country can do to prepare for global economic shocks no one sees coming, Reeves pivoted towards far more familiar territory: spending money.

This was the ‘investment’ part of Reeves’s vision – one in which capital spending is taken far more seriously and not abandoned for ‘short-term gains’. She had plenty of criticism not just for the Tory party, but for her own party during the Blair-Brown years, for the failure to provide more security through investment. If there were any doubt of Reeves’s commitment to industrial strategy, the shadow chancellor included a big defence of this in her speech, insisting it isn’t about ‘the state picking winners and losers’, but rather ‘working in genuine partnership with business to identify the barriers and opportunities they face.’ By calling on her audience to ‘(accept) that a country the size of Britain cannot excel at everything,’ she also hinted strongly that the government had an important role to play in selecting which industries to focus on.

Reeves’s argument for a more ‘active state’ (she deliberately tried to distinguish this idea from the ‘big state’) was pitched in a rather curious way: rather than make the case for bigger government, she pointed out that the state was growing whether we like it or not. ‘The reality is we are already stumbling blindfolded into an era of a bigger state, the unavoidable corollary of sticking plaster politics’ – evident from record high levels of taxing and spending. ‘Securonomics advances not the big state but the smart and strategic state’ she said. In other words, you can have Big Toryism or Big Labour running the country – forget a leaner state.

Reeves finished her lecture on ‘reform’, which translated to pro-growth policies, mainly in the form of a planning overhaul. Once again, we heard very positive noises about the party’s plans to overcome what Reeves called ‘the single greatest obstacle to economic success’, promising to put planning reform ‘at the very centre’ of the party’s plans, as well as recommitting to local housing targets scrapped by the Conservatives.

This was easily the most optimistic part of Reeves’s vision, though it notably didn’t gel with the rest of the speech: the shadow chancellor spent the majority of her lecture talking up the merits of a hands-on state, only then to promote supply side reforms that would require a big rollback of government and red tape. The message seemed to be: build up the state to get it out of the way.

The biggest problem for Reeves going into her lecture was how to frame the (now pulled) pledge to funnel £28 billion a year into green investment. This money had become the example of ‘securonomics’ in action. If she wasn’t going to abandon the philosophy, how to explain the abandoned pledge?

Eager to avoid the tough question that her lecture and Labour’s bigger plans stir up – so, how exactly do you pay for all this investment? – Reeves opted for a bit of politicking instead. It was Liz Truss’s mini budget, she claimed, which ‘dramatically changed the fiscal circumstances in which we must operate’, noting that ‘in October 2021, the Bank of England base rate was 0.1 per cent. In little over two years, that has risen to 5.25 per cent,’ taking net debt interest costs to a staggering £82 billion. ‘These changed circumstances,’ she said, ‘explain the decision that Keir Starmer, the shadow cabinet and myself recently reached over the scale of government spending attached to Labour’s Green Prosperity Plan.’

If this was meant to land a blow on the Tories during her City speech, then it did the job. But if it was meant to bolster Labour’s own economic credentials, it did the shadow chancellor no good at all – not least because interest rates were rising worldwide at the time Truss announced her big plans for tax and spend. The mini-Budget had the nasty effect of making matters temporarily worse in Britain than they were elsewhere – as anyone renewing their mortgage in the following months will know – but the effects of the mini-Budget worked their way out of the system long ago.

That leaves Reeves and her party with a difficult conundrum on their hands: they are promising their leadership, and their expansion of the state, will deliver a kind of economic security that can’t be shaken. Yet the past few years have delivered lesson after lesson in just how little is in any one government’s control. Reeves lecture implies ‘securonomics’ will steady the UK economy and allow for far better responses to economic shocks and upsets. Others will be wondering: is the fix for stagnant growth and a weighed-down Whitehall really going to be a bigger state?