How would Rachel Reeves handle business if she becomes UK chancellor?

As millions of Britons were sent home from work to curb the spread of Covid-19 in March 2020, Rachel Reeves took the founder of pub chain Wetherspoons to task.

In letters and online, the then-chair of the House of Commons business committee pressed Sir Tim Martin about reports he was refusing to pay his 40,000 staff until Wetherspoons received government furlough money.

Martin recalled the episode as being “based on a misunderstanding” and insisted Reeves had “got this wrong”. He claimed she had seized on the affair for the sake of “political point-scoring”.

The pub chain chair is among dozens of business figures who grappled with Reeves at the committee, some of whom were left sore by their dealings with the person who could be the UK’s first female chancellor.

The Financial Times spoke to more than 20 people who worked with Reeves or were summoned by her committee between 2017 and 2020, as well as analysing pamphlets and articles she wrote during her tenure.

The people and documents portray a politician determined to challenge the sharpest edge of business practices, albeit on subjects that already had broad cross-party support — including Covid regulations, executive pay and the quality of audits by the Big Four.

As shadow chancellor since 2021, Reeves has been at the heart of Labour’s wooing of business ahead of the general election on July 4. But in the past she flirted with radical policies. In a 2018 speech and pamphlet, she advocated £20bn a year of wealth taxes, one of a clutch of proposals since dropped.

A former Bank of England economist, Reeves entered parliament in 2010 and had a fast rise, securing promotion to the shadow cabinet within a year. But her ascent came to a halt when Jeremy Corbyn became Labour leader in 2015.

Reeves was among many centrists who refused to serve in the hard-left MP’s top team, returning to the backbenches and battling deselection attempts by Labour party members in her Leeds West constituency. 

But her appointment as chair of the business committee, which scrutinises government as well as UK plc, allowed her to maintain a prominent profile while largely sitting out Labour’s Corbyn era.

Among the probes she launched was an inquiry into the audit industry in 2018 after the failures of retailer BHS and government contractor Carillion.

The probe drew some significant admissions: the then boss of Grant Thornton triggered a backlash in 2019 after he said his company did not look for fraud when carrying out audits, a week after Patisserie Valerie went bust. Grant Thornton had audited the café chain.

One adviser to the head of a Big Four firm at the time recalled the heads of Deloitte, EY, KPMG and PwC waiting to be questioned in 2019: “All of them were sitting outside in the corridor looking like terrified schoolboys about to get a bollocking from the headteacher.”

They added that Reeves engaged well with the industry “but never got reeled in by all the lobbying, invites and sucking up”.

Former EY partner Richard Wilson said Reeves’ focal issues, in particular her preoccupation with auditors’ independence from other Big Four functions, were “overstated” and “quite dated”.

In its conclusions, her committee signalled it was open to a full break-up of the Big Four’s audit and advisory arms to improve their independence, but regulators later opted for a more limited ringfencing.

Reeves also steered prominent inquiries into the collapses of travel company Thomas Cook, which left 21,000 people without a job, and Carillion, which had liabilities of £7bn.

“Everybody we have seen . . . has blamed everybody apart from themselves,” Reeves told Thomas Cook executives in a hearing in 2019. “They never look at themselves and the decisions they have made.”

Former boss Harriet Green said appearing before Reeves’ committee multiple times felt like being “in the spotlight” but praised her “punchy” questions and unpatronising tone.

“Her humour, sarcasm and a touch of theatre at times never crossed the respect line for the many . . . ex-Thomas Cook employees sat watching,” Green added.

One former executive grilled by Reeves was less effusive: ​​they said Reeves was “a person with such arrogance and lack of empathy”.

The review into Carillion, carried out with the Commons work and pensions committee, accused the outsourcer of “recklessness, hubris and greed” and criticised a “panoply of auditors and advisers who looked the other way”.

In 2021, when Starmer brought her into his top team, Reeves described that probe as “the most politically formative experience” of her life. The proposals remain vague, but Labour has said it plans the “biggest wave of insourcing” for a generation if it wins power this year.

As chair Reeves also nurtured a reputation as a bridge between parties, saying in 2017 “there are good people who are Conservative MPs and who vote Conservative and I’m not ashamed to say that”.

Ian Liddell-Grainger, a Tory MP who sat on the committee between 2017 and 2019, said he “couldn’t fault” Reeves. “I suppose the only thing is, she was very pedantic, but you would expect that from an economist,” he added.

Reeves also homed in on a hobby horse of then-prime minister Theresa May, who was eager to crack down on big executive pay packages, by starting an investigation into the practice.

It concluded that there needed to be a “stronger, more proactive regulator” to “bear down” on businesses.

But during her time on the business committee she sought to outflank Corbyn from the left on the issue of taxation.

In “The Everyday Economy”, a 2018 pamphlet, Reeves called for £20bn in wealth taxes — an idea Corbyn’s shadow chancellor John McDonnell considered too controversial, and one she has since dropped.

She argued that “capitalism has been allowed to expand into areas of society where markets should not belong”, and recommended companies report on their pay ratio between executives and ordinary staff and have at least two employees on their boards.

Reeves also suggested linking the differential between a company’s highest and lowest paid workers to the level of corporation tax it paid.

This would be part of a “new model of Labour statecraft” combining “increases in public spending with strategies for improving productivity and creating the wealth to pay for it”.

As shadow chancellor Reeves has struck a fiscally cautious note, mirroring many of the governing Conservative party’s spending plans. She has ruled out a swath of tax rises, including wealth taxes.

Asked why many of her most radical ideas had faded, some colleagues suggested Reeves’ call for a big wealth tax was perhaps in part an attempt to neutralise hundreds of “Corbynista” party members in Leeds West.

James Meadway, an economist and former adviser to McDonnell, said there was probably “a degree of political positioning going on . . . wealth inequality was an issue that had a lot of attention” at the time.

A spokesperson for Reeves said it was “rubbish” that she was trying to appease left-wing Labour members and that policies outlined in the pamphlet “reflected her views at that time”.

“The values remain the same, but the policies have had to adapt to different times,” they said, noting the impact of Brexit and the pandemic.