The venue for Zack Polanski’s economic speech on Wednesday – a sunny north London garden centre – could hardly have been more different to the sombre City backdrop for Rachel Reeves’s Mais lecture a day earlier.
The chancellor was, as it happens, the last politician to give a major economic speech at the New Economics Foundation (NEF), the leftwing thinktank that invited the Green party leader, Polanski, to set out his stall as part of its 40th anniversary celebrations. Back in 2018 it hosted the speech in which, as a backbencher, Reeves called for an “everyday economy” that would prioritise the needs of low-paid workers.
But with their determination to appear sober and moderate, Reeves and Labour have struggled to communicate in government a willingness to shake things up, even where they have in fact made significant changes.
Enter Polanski. His speech was by far the most wide-ranging attempt to set out a distinctly Green economic policy since he took over as the party’s leader in England and Wales a year ago (although as he made clear, any final manifesto will ultimately be decided by party members).
Much of his diagnosis was familiar: via Thatcher’s privatisations and deindustrialisation and 14 years of Tory austerity, the UK economy had been transformed “from a place which made things people need, to a place which made money for people who own the place”.
“It is clear that we have rewarded greed, and punished compassion,” he said, pointing to the growth in the number of billionaires, one in four of whom, he said, made some of their money from property wealth or inheritance.
Polanski’s tone was noticeably more pessimistic than Reeves’s promises on Tuesday of growth led by AI, a northern renaissance, and a closer relationship with the EU. Instead, he described an economy in which “people feel like they’re running every day just to stay in the exact same place”.
There was little acknowledgment of anything Labour had done: he complained about diminished workers’ rights, for example, without mention of the government’s employment rights bill. And he repeatedly underlined the importance of borrowing for investment, without noting that Reeves had changed the fiscal rules to allow a sharp rise in borrowing.
Polanski’s solution to the country’s ills came in three parts: tackling “rip-off Britain” and bringing down inflation, by introducing rent controls – which, he made a point of saying, were in place in 16 other European countries – and renationalising the water industry.
His plea to protect Britain’s rivers because of “the insects, the fish, the birds that depend on them” was in stark contrast with Reeves’s much-repeated irritation that “bats and newts” can hold up development projects.
Polanski’s second plank was major tax reform. He has been pilloried for advocating a wealth tax as though it could solve all the country’s ills, and was keen to make clear it would be only one change among many, including equalising capital gains and income taxes. But he did insist a wealth tax would be a “day one priority” for a Green government – levied at 1% on assets above £10m, and 2% over £1bn. He did not specify whether, for example, property or pension assets would be included.
Third, he called for an overhaul of the fiscal rules, which, he complained, made tax and spending policy too sensitive to small moves in the market for UK government bonds or gilts, calling this a “bond market doom loop”.
Reeves has tried to avoid this by planning to meet her fiscal rules with a much larger margin for error, or headroom, and asking the Office for Budget Responsibility to judge her against them once a year instead of twice.
But Polanski called for a much more radical approach – of scrapping the OBR altogether in favour of what he called “fiscal referees”, who would give a general ruling on whether the government’s plans looked sustainable, rather than a pass or fail against narrowly drawn rules.
That would be a significant shift, and might cause market anxiety, but steers well short of modern monetary theory, which Polanski has previously been accused of flirting with, and which suggests governments can simply print money.
The response of the Labour chair, Anna Turley, to the speech was that economists had criticised “the Greens’ ‘catastrophic’ plans to print money, which would hammer working people and their living standards” – but Polanski made no such suggestion.
In the subsequent Q&A, the Green leader cautiously avoided falling into potential elephant traps, such as promising billions of pounds in unfunded spending.
On the looming energy price emergency, he promised to cushion every family – even the wealthiest – against soaring utility bills, paid for through a “loophole-free” version of the windfall tax on energy companies and capital gains tax rises.
That is a somewhat surprising policy for an environmental party. As Michael Jacobs, a professor of political economy at the University of Sheffield and a former Labour adviser, puts it: “Most economists would say in circumstances in which prices are rising: you should subsidise energy saving, not bill-paying.” But it is a concrete offer to cash-strapped households that will help Polanski to put Labour on the spot.
If the Greens continue riding high in the polls, their economic stance will come under intense scrutiny in the months to come – including by the bond markets. But as Reeves wrestles with how to protect households against the shock unleashed by the war in Iran, Wednesday’s carefully written speech showed Polanski’s party positioning itself cannily as a potential home for left-of-centre voters exasperated with the status quo.
