The chancellor needs a vision. Can she find it in ‘Abundance’?

This may sound a bit sensationalist for a government just fourteen months into a Parliament, currently presiding over the fastest growing economy in the G7, with the value of the Pound at a nine-year high, and with both the UK stock market and average house prices at all-time highs. But the very fact that these (admittedly hand-picked) data points are so readily dismissed - and are failing to cut through with the UK electorate - is indicative of problems lurking just below the surface.

For many people grappling with consumer prices that are up 28% in five years - with food and energy up by an average of 40% - and real wages still little more than they were twenty years ago - those upbeat data points feel remote. Throw in a widespread feeling of unfairness in areas of welfare, justice, housing, and immigration - as well as a tax rate at a 75 year high - and this is not a UK economy long on positive vibes.

Those rather more sobering data speak to deep-seated economic issues in need of reform. Of energy markets, of planning, of skills, of the throttling overhead of regulation that chokes off growth and raises prices. None of these changes are easy, and they are definitely not popular. To deliver them requires an overarching vision for the economy that the electorate can buy into, and government MPs can vote for.

In the Rachel Reeves’ defence - and this is a Chancellor who I believe gets disproportionate flak for the job she is doing - she did have a vision. It was called “Securonomics”. This was the umbrella term in her 2024 Mais lecture that set out her vision whilst still in opposition. That lecture spoke to public investment in defence, health and infrastructure. The problem she faces is that Securonomics got its intellectual inspiration from Bidenomics, and a financial underpin from supportive borrowing costs. Bidenomics, like much in the World economy, has been swept away by President Trump. The financial underpin has been undemined by higher inflation and interest rates, and faltering investor demand for long duration public sector debt. The cost for the government to borrow for thirty years – a key benchmark for longterm investment plans – is now back at its highest rate since 1998.

This means that Securonomics has been quietly dropped. It has been barely mentioned over the last twelve months. The problem is what is left is a vacuum. Now there will be Times readers who care little for visions and their associated sound bites, but let me try and convince you why these matter.

Governing a developed 21st century economy like the United Kingdom with an ageing demographic, creaking infrastructure, and facing a fraying of global economic co-ordination is a tough job. It requires difficult tradeoffs and unpopular choices. The advantage of a vision is you can hang each policy decision off that overarching goal. For Nigel Lawson it was liberating the private sector, for Gordon Brown it was investing in public services, for George Osborne it was repair from the fallout of the Financial Crisis. Osborne in particular laid out a very clear plan that 80% of the repair to the public finances would be carried out through spending cuts, and 20% through tax increases. There is a feeling in financial markets that recent government u-turns on welfare reform and the means testing of Winter Fuel Payments means the “Reeves Ratio” is doomed to be 100% tax increases, and 0% spending cuts. Blocked in politically, and with a Prime Minister in Sir Keir Starmer for whom economics is something of a side interest, this is a gaping hole at the heart of government.

The death of Securonomics has robbed the Chancellor of her vision on which to hang her decisions surrounding tax, spending, and regulation. The current vision from Labour appears to be that they are not the Conservatives. A cursory look at the Reform UK campaigning shows how doomed to failure that approach is.

So if we conclude that it would be a leap too far for a Labour Chancellor to replace Securonomics with an austere agenda, then what other left-of-center visions are there? The one that creates most interest over in the United States is Abundance. Easily dismissed as simply the title of an airport terminal book by Ezra Klein and Derek Thompson, this vision is for economic growth and prosperity by unconstraining development in the area of housing, in energy, and in infrastructure. Flooding the economy with freedom to operate and to build businesses, Abundance is fundamentally pro-contestability by reducing the frictions that large multinational firms can most easily navigate. The left can find succor on how such an agenda can bear down on the ability of a small number of very large firms to extract supernormal profits.

The key will be for the Prime Minister to bless this vision and all its implications. It means liberating labour and product markets, not regulating activity. There is a path here where the Labour front bench gets out of the way, rather than stage manage each aspect of economic activity. It was a seam of thought that Starmer briefly mined on 5 July on the steps of Number Ten as he spoke about “tread[ing] more lightly on your lives”. Alas there is little evidence of this over the last year. Construction firms speak of well-intentioned planning reforms being swamped by mountains of new employment, environment and safety regulations. The default within large parts of the state sector is to ask the private sector to explain why they should be allowed to undertake activity. This is inconsistent with a high growth economy. Abundance relies on the presumption of yes from regulators, rather than the fear of no.

The Chancellor has shown tentative signs of this pivot recently asking Treasury officials to work up plans to go faster on approving critical national infrastructure, including scaling back the role of judicial review. The issue is that that this needs the wholehearted backing of her Prime Minister to take on his increasingly rebellious backbenchers. This extends beyond runways and wind farms, Abundance means a whole mindset shift on regulation, including on developing all sources of energy. An early test will come this autumn as the government sets carbon budgets to hit Net Zero. The Prime Minister needs to back his Chancellor in the internal debate over the clear trade off between economic growth and Net Zero, and repeal legislation if necessary. If growth is the primary mission for this government then it is time for Number 10 to show up.

The Chancellor gets this, most of her party do not. The only possible arbiter in such circumstances is the Prime Minister. Having not backed her on even modest spending cuts unveiled at the Spring Statement he has undermined her position. If he fails again this autumn, the Chancellor should take a dignified walk.