Rachel Reeves may be unpopular, but she is quietly rebalancing UK plc

An air of unreality settled on a Westminster conference room last week, as Rachel Reeves, upbeat in a powder pink power suit, gave a speech about boosting jobs and growth along the “OxCam corridor”.

“If we get this right, working together, this corridor will not just compete globally, it will lead globally. We can do that together!” she told the audience of investors, policymakers and entrepreneurs.

She was warmly received; but few in the room can have been unaware that the chancellor may be out of the job in a few weeks’ time, if Andy Burnham wins the Makerfield byelection, sweeps into Westminster, and topples Keir Starmer.

Reeves is irrevocably associated with some of Labour’s most embarrassing reversals – on the winter fuel allowance and disability benefits cuts, as well as the quieter climbdown on farmers’ inheritance tax.

And the increase in employer national insurance contributions (NICs), which she reached for to avoid busting Labour’s ill-advised manifesto tax pledges, cannot have helped the struggling jobs market.

The killjoy demeanour that advisers thought best to build trust in the UK’s first female chancellor – in contrast to her warmth away from the camera – does not seem to have endeared her to voters either.

Polling suggests Reeves is the least popular senior politician – though chancellors in hard times are never going to be loved, and misogyny may play a role too. YouGov’s latest tracker found a bleak 66% of respondents viewed her unfavourably, against 17% with a positive opinion.

For all these reasons, it seems unlikely Burnham would heed the pleas of Reeves’s band of backbench backers, and keep her on – despite already pledging to follow her fiscal rules, to avoid a bond market rout before he even takes the crown.

Musing aloud in interviews about his “sympathy” for the idea of reversing the NICs rise – one of Reeves’s important strategic calls – hardly suggests he is likely to want her around.

Yet Reeves’s subject last week – rekindling regional growth with the help of an active state, not just in OxCam but also across the “northern growth corridor” too – is an aspect of her approach likely to outlive her tenure.

Reeves is sometimes accused – including, it turns out, by Peter Mandelson – of lacking a strategy. She was, one of his many catty messages said, “on a growth mission, but without an argument about where the growth will come from or how”.

That may be a fair criticism when it comes to the government’s softly-softly approach to rebuilding relations with the EU – hemmed in, like its tax policies, by red lines.

But Reeves did arrive in post determined to reverse the chronic underinvestment widely acknowledged to be a significant factor in UK economic underperformance – changing the fiscal rules to make room for significantly more borrowing, in order to do so.

Social housing and net zero received generous settlements; and she was convinced by the argument that the biggest wins from public infrastructure investment would be in what she called in last week’s speech “dense, interconnected city regions”.

The “OxCam corridor” has a much longer history than Reeves’s time as chancellor (under the Tories it was a more highfalutin “arc”); but she has brought to it public investment, political muscle – and now a powerful new development corporation for Greater Cambridge.

Andrew Carter, the chief executive of the Centre for Cities thinktank and a longtime advocate for devolution, says that when it comes to projects such as these, strong backing from government matters.

“The Cambridge-Oxford stuff has been around for quite a while. So it’s not so much what’s to be done, it’s more, will they do it – particularly in the face of a bit of resistance or a bit of umbrage from locals that don’t want development, or councils that want to remain in control.”

He adds: “Where Reeves has been different, I think, is that she does seem to have said, ‘We are going to do it.’”

Earlier on Wednesday, the chancellor had donned a hard hat to visit the muddy site in Bedfordshire where Universal is planning a vast new theme park – with the help of £1.3bn in public investment, including in local transport infrastructure.

In a less showy but potentially more consequential bit of spadework, she has rewritten the Treasury’s green book – the rules about which taxpayer-backed projects get the go-ahead – to ensure it is no longer biased towards spending in London and the south.

Treasury officials have also been hard at work on plans announced in Reeves’s second Mais lecture, in March, that would hand metro mayors a share of tax revenues, starting with income tax.

Veterans of the UK’s cautious, decades-long march towards regional devolution have hailed the chancellor’s plan as a much-needed next step. It could allow mayoralties to borrow against future income, potentially freeing them to make decisions about new projects, without regularly reverting to Whitehall.

Reeves had already awarded the city regions five-year transport budgets, to allow them to take a more strategic approach; while “integrated settlements” have brought together scores of separate Whitehall funding pots, to give metro mayors more flexibility to decide their priorities.

Burnham, whose political career has benefited from the onward march of the metro mayors since way back when George Osborne was residing in No 11, is likely to make much of devolution as a catalyst for growth – and may bring fresh impetus to projects such as the long-awaited Leeds tram, and Northern Powerhouse Rail.

Reeves’s time in the Treasury has not all been about balancing the books – with like-minded Labour colleagues, she can also claim to have set in motion the next phase of rebalancing the UK’s London-centric economy.