Reeves needs to take a leaf out of Gordon Brown's book

Telegraph

13-07-2025

In 2002, Gordon Brown introduced the small breweries' relief (SBR), slashing taxation for UK 'micro-breweries'.
The then-chancellor's instincts were broadly statist. Britain's tax burden grew from 31pc to 34pc of GDP from 1997 to 2010 – the decade he spent running the Treasury followed by three more as prime minister.
But Brown also had commercial acumen, understanding the need not just to talk about economic growth but create an enabling environment to make it happen.
His SBR tax-break, which saw breweries producing up to 5,000 hectolitres (around 880,000 pints) annually paying half the standard duty rate, was a case in point.
SBR was transformative, sparking the formation of thousands of independent breweries – creating not only thousands of jobs, but hundreds of millions of pounds in tax revenue from production, distribution and sales activities that wouldn't otherwise have existed.
Britain's declining beer industry was revolutionised, as small, often family-run breweries emerged to compete with large national and global producers. There was a brewing resurgence not just in cities, but in towns and rural areas too, as 'craft breweries' became rooted in countless UK communities.
The financial relief offered by SBR encouraged investment, innovation and a dramatic rise in beer styles – more and better products at lower prices. But, above all, Brown's anti-statist, tax-cutting move generated more jobs, higher exports and far more tax revenues too.
Rachel Reeves had a picture of Gordon Brown on her wall as a student. Yet today's Chancellor should remember that her political hero and mentor, for all the big-state proclivities she shares, was pragmatic and courageous enough to sometimes shrug off the comfort blanket of Left-wing ideology and do what worked.
Brown cut the basic rate of income tax from 23pc in 2000 to 20pc in 2007, stimulating economic activity. He reduced the main rate of corporation tax from 33pc to 28pc and the small business rate from 24pc to 19pc.
Most famously, in his first Budget in 1997, he slashed the long-term rate of capital gains tax (CGT) from 40pc to 10pc for those building businesses, super-charging innovation and entrepreneurship.
Yes, Brown made some disastrous calls – not least selling-off much of the UK's gold stock for a song and the abolition of pensions funds' dividend tax credits, costing hundreds of billions of pounds in compounded returns foregone, seriously weakening UK retirement funds.
But despite his political tribalism and robotic delivery at the Commons dispatch box, he was capable of intellectual agility, demonstrating policymaking nous which, from time to time, really hit the spot.
Since becoming Chancellor last July, Reeves has shown no such agility. She has hiked tax rates relentlessly, with her October Budget comprising a huge £40bn annual tax increase plus £30bn of extra yearly state borrowing.
Having imbibed the soft-Left nostrums of mediocre academic economics, she is convinced that state spending, financed by taxation and borrowing, is the only route to growth.
In the real world, her crude, naive Keynesianism, implemented at a time of already serious fiscal peril, has caused the decidedly lacklustre economy she inherited from the Tories to stagnate even more, while driving us to the edge of a fiscal crisis. Hammered by Reeves, consumers have pulled in their horns and business investment has stalled.
No surprise, then, that on Friday the Office for National Statistics confirmed that GDP fell by 0.1pc in May, having already contracted 0.3pc the month before.