November 24, 2011 9:55 pm

Newcomer fears pain of Tory austerity

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Rachel Reeves says her experience as a Bank of England economist studying Japan’s flatlining economy convinced her of the need to take decisive action to avoid a prolonged recession. Now she claims that Conservative MPs are starting to see the light.

Ms Reeves, the 32-year-old shadow Treasury chief secretary, seized on remarks by David Ruffley, a Conservative member of the Commons Treasury committee, that the markets would be sanguine about a programme of tax cuts to boost the economy.

Rachel Reeves’ CV

Rachel Jane Reeves

Born: 1979

School: Cator Park School for Girls, Bromley

University: Politics, Philosophy and Economics at New College, Oxford, then Masters in Economics at lse

Career: Economist at Bank of England and British Embassy in Washington from 2000 to 2006

Hbos analyst from 2006 to 2009

Elected as Labour MP for Leeds West in May 2010 with majority of 7,016

As an MP, sat on the Business select committee before her appointment as shadow pensions minister

October 2011: Promoted to shadow chief secretary to the Treasury

“The IMF said earlier this year that if the economy continues to underperform the government should introduce temporary tax cuts and it is welcome that Conservative MPs are now finally joining Labour in making this case too,” she said.

Ed Miliband said yesterday that a short-term economic boost would have to be accompanied by longer-term austerity and that the next Labour government would be forced to deliver social justice without any money.

That means Ms Reeves, the youngest MP on the party’s front bench, would be in charge of administering fiscal discipline to any colleagues inclined to “tax and spend”.

That iron mantle may sit awkwardly with the politician who joined the Labour party in Bromley aged 17 because she was worried about the lack of investment in schools.

“In my secondary school, there weren’t enough textbooks to go around … our sixth form was two prefab huts in the playground,” she told the Financial Times in an interview. “It just seemed to me so unfair that we weren’t getting the support we needed.”

Earlier this year Ms Reeves was out in Hyde Park with Mr Miliband and others protesting against the cuts and calling for an alternative.

She insists that the Labour prescription, which would increase the debt burden, would not jeopardise Britain’s credit rating. “I think what matters is that you have got a credible plan for deficit reduction,” she says. “I also think that it matters that you’ve got a credible plan for growth”.

Few could be better equipped for the technical nature of her role as deputy to Ed Balls, shadow chancellor.

A keen chess player – who recently beat 12 primary schoolchildren in a simultaneous game – she has always been a maths buff. Her school careers adviser suggested she should be an actuary.

Instead she went from Oxford university to a job at the Bank of England. She had an interview with Goldman Sachs but turned them down. “I could have been a lot richer.”

She began her six-year stint at the Bank analysing Japanese quantitative easing. “Unless you take swift action in the wake of a financial crisis the problems stick around for 10 to 20 years,” she says.

Ms Reeves entered Parliament only 18 months ago and stepped up to the shadow cabinet in October, along with Chuka Umunna, Labour’s fellow “bright young thing”.

Her ascent recalls that of George Osborne, who became shadow chancellor at just 33. But the comparison horrifies her: “No one has ever compared me to Osborne before. That is bizarre.”

She is untainted by the New Labour baggage carried by many in the shadow cabinet, who have been blamed for their actions in the run-up to the economic crash. “Under our watch we did have a recession,” she admits frankly.

Ms Reeves supported Ed Miliband in the leadership campaign, she says, because he was prepared to listen and not come in with “stock answers”. She is sympathetic to public sector unions fighting for a better deal on pensions, but says she is “pragmatic” on private provision in the public sector.

But will she have the determination or the inclination to face down high-spending colleagues as the election approaches? “I think I’m quite robust,” she says. Then as the interview comes to a close she adds: “I’m tough.”

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