What is 'Securonomics'?
Securonomics involves a more assertive approach to government, including a focus upon investing in initiatives that contribute to the financial security of its citizens.
It draws upon supply side economics (the idea that the engine of economic growth is maintaining the on-going supply of goods and services) as well as 'Bidenomics', Joe Biden's economic agenda, which has seen large subsidies offered to strategically important sectors under the Inflation Reduction Act 2022 and the CHIPS and Science Act 2022, not only to pump prime the economy, but also to reduce the impact of geopolitical shocks.
Indeed, it was pertinent that in April 2023, Rachel Reeves chose the USA as the location for her landmark speech on the subject of Securonomics.
She stated that two fundamental mistakes had been made by government in recent years. Firstly, government had been too laissez-faire, allowing the free market to hollow out industries and leave many parts of the country suffering from severe underinvestment. Secondly, in the wake of geo-political shocks such as Covid-19 and Brexit, there hadn't been a clear economic strategy. The result was that many people are financially insecure and unable to see a way out of their predicament. Indeed, she cited a couple in Worthing who had to work five jobs in order to care for their children.
The solution, Rachel Reeves argued, is for government to invest in a strategic manner in order to achieve the outcomes it wants for its citizens. The Government's role shouldn't "simply be to get out of the way of free enterprise" but instead to work with various stakeholders to spur the economy on through targeted investments, which increase prosperity and benefit communities.
Further detail on the concept was set out in a policy report released by Labour Together: A New Business Model for Britain: Building Economic Strength in an Age of Insecurity in which Rachel Reeves called for a move away from ideas of free market economics to a model where the state works strategically alongside the private sector on an industrial and regeneration strategy. The second idea is a model of growth that shifts away from the richest parts of London and the South East, to one that actively seeks to disperse growth opportunities throughout the rest of the UK
This new economic policy makes it clear that Labour intends to move towards more interventionist state – not necessarily more money being spent, but that which is spent used in a much more targeted manner.
Indeed, the reference within the Labour Election Manifesto, to Securonomics goes on to state that Labour's "approach will depend on a dynamic and strategic state. This does not mean ever-growing government but it does mean a more active, smarter government that works in partnership with business, trade unions, local leaders, and devolved governments".
What does Securonomics mean for regeneration?
A strategic focus to investment
Securonomics relies upon large strategic interventions.
The Labour Manifesto sets out that, if elected, they will create a £7.3bn National Wealth Fund investing in projects that contribute to their growth and clean energy objectives, including:
- £1.8bn to upgrade ports and build supply chains across the UK;
- £1.5bn in new gigafactories;
- £2.5 billion to rebuild our steel industry;
- £1 billion to accelerate the deployment of carbon capture; and
- £500 million to support the manufacturing of green hydrogen.
Sitting behind this will be a ten-year infrastructure strategy, aligned with the industrial strategy and regional development priorities.
Greater emphasis on local decision making
The Labour Manifesto states that "Every town and city across the country has a vital contribution to make to our economy. But too many areas have been held back because decisions are often taken in Westminster, and not by local leaders who understand local ambitions and strengths."
This seems to follow on from a point made in the USA speech that one mistake made in recent years has been "the assumption that the people and places that matter to a country’s economic success are few in number. This misconceived view held that a few dynamic cities and a few successful industries are all a nation needs to thrive."
It therefore seems highly likely that Labour will legislate to ensure more decisions are made at a local level, including by Mayoral Combined Authorities.
Fewer, larger funds
We can expect there to be fewer, larger funds that are administered on a local basis, with stronger centralised checks being carried out.
According to the Local Government Association 386 types of grant were made available between Central and Local Government in 2022/23. Both the Labour and Conservative front benches have been clear that a rationalisation of the funding landscape is required.
With Securonomics it becomes all the more important that funding is targeted correctly and therefore it is to be expected that smaller funds may be scrapped in favour of larger pots of public funding.
More stringent compliance checks
Alongside more targeted investment will be a stronger focus on governance and tackling mismanagement of public funds.
The Manifesto states that a Labour government "will provide greater flexibility with integrated settlements for Mayoral Combined Authorities that can show exemplary management of public money."
The implication is that there will be checks which score the management of public money by Mayoral Combined Authorities, but also other public authorities. Those that show exemplary management will benefit from greater flexibility, those that don’t will, presumably, be subject to increased scrutiny.
The Manifesto pledges to establish a fixed-term Covid Corruption Commissioner and use every “means possible to recoup public money lost in pandemic related fraud and from contracts which have not delivered”.
Conclusion
Securonomics isn't currently a commonly used word, but depending on the outcome of the General Election, it may become one. After all, Securonomics provides an overarching rationale for Labour's approach to regeneration, perhaps best summed up by the Manifesto commitment that, if elected, Labour intends to "strategically use public investment where it can unlock additional private sector investment, create jobs, and provide a return for taxpayers".
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