It’s only eight months since Rachel Reeves delivered her first Mansion House speech as Chancellor of the Exchequer. But economic strategies don’t relaunch themselves, so yesterday evening she was back in the City of London to give credibility another try.

Last year, her big idea was to consolidate local authority pension funds into “superfunds” and make them take bigger risks with their investments. This time, she’s promising to set the financial sector free. Specifically, Reeves said she’ll cut red tape — a good thing if it encourages investors to get the British economy growing again. At the top of her list is the regulation of mortgage lending, which the Government intends to loosen.

Reeves is seemingly expecting us to forget why these controls were tightened in the first place. It was because one of her predecessors, Gordon Brown, unleashed a surge of cheap credit in the 2000s which eventually crashed the property market and then the rest of the economy. Britain has arguably never fully recovered, and yet Reeves is pinning her growth strategy on a property bubble of her own.

In fairness, her reforms aren’t limited to mortgage lending. Downing Street spin doctors are promoting the overall deregulatory package as another Big Bang, in reference to the Thatcher government’s 1986 decision to let the financial sector abandon its bowler-hatted traditions and move into the modern age. It was a roaring success, re-establishing London as a global city after decades of decline. However, this wasn’t achieved in a vacuum. That Big Bang coincided with tax cuts, the taming of the trade unions and the wholesale regeneration of the London Docklands. Today, there’s nothing remotely comparable to reinforce Labour’s economic strategy.

Officially, the policies which Reeves discussed yesterday are part of the “Leeds Reforms”. The message is that deregulating the financial sector won’t just be good for London, but for the rest of the country too. As England’s second biggest financial center (and Reeves’s home city), Leeds was chosen to make the point.

However, Leeds is also infamous for being the biggest city in Western Europe without a mass transit system. It’s an embarrassing fact that illustrates the UK economy’s key structural weakness: chronic underinvestment. While we’re happy to pump money into bidding up property prices, we deny funding to the projects we actually need.

Last month, it was announced that funding would finally be made available for a West Yorkshire tram network. However, construction isn’t scheduled to start until 2028 and won’t finish until 2040. What’s more, the project is a consolation prize for the previous government’s cancellation of the eastern leg of HS2 along with the HS3 high speed link from Manchester to Leeds. The Chinese must be laughing at us.

The money for Britain to do better exists, but this Labour government has other priorities for it: buying off public-sector unions, abandoning welfare reforms, funneling benefits to unemployed immigrants, perpetuating the triple lock on pensions, and paying a hostile foreign government to annex British territory in the Indian Ocean.

In all, there are tens of billions of pounds — and trillions over a longer timescale — that could be freed up for wealth-creating investment. This would require a massive commitment of political capital; but if ministers want the financial sector to take more risks, then they must lead by example.

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Peter Franklin is Associate Editor of UnHerd. He was previously a policy advisor and speechwriter on environmental and social issues.

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