Reeves warns UK must accept hard times or risk 'ruin' as Chancellor lays out plans to ‘rebuild Britain’ ahead of Budget
22 September 2024, 22:54
The UK faces 'ruin' unless the public finances are stabilised, the Chancellor is set to argue in her conference speech looking ahead to the Government's first Budget.
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Rachel Reeves will tell the conference in her first party speech as Chancellor that "tough decisions" on spending and tax are necessary to drive economic growth.
Labour's autumn Budget statement will be used to “rebuild Britain” and deliver on the change the party offered at the General Election, the Chancellor will pledge in the speech in Liverpool on Monday.
Ms Reeves' address comes as ministers seek to move on from fury about the scrapping of winter fuel payments and a row about donations.
The Liverpool gathering was originally expected to be a victory lap for the party after its landslide success at the general election. But the party has struggled to counter suggestions that the Government have only offered doom and gloom since coming to power.
The Chancellor has warned for weeks about a poor economic legacy left by the Conservative government but is expected to signal a path towards further public investment.
In her speech she will claim investment in public services is the “solution” to the UK’s growth problem and that insist economic stability is “the crucial foundation on which all our ambitions will be built”. The Chancellor will seeks to justify to Labour members the spending restrictions which are aimed at filling a £22 billion “black hole” in public finances.
The Chancellor will say: “I can see the prize on offer if we make the right choices now. And stability is the crucial foundation on which all our ambitions will be built, the essential precondition for business to invest with confidence and families to plan for the future.
“The mini-Budget showed us that any plan for growth without stability only leads to ruin. So we will make the choices necessary to secure our public finances and fix the foundations for lasting growth.
“Stability, paired with reform, will forge the conditions for business to invest and consumers to spend with confidence. Growth is the challenge, and investment is the solution.”
But Ms Reeves will join Sir Keir in maintaining “there will be no return to austerity” in an appeal to the Labour movement
“Conservative austerity was a destructive choice for our public services – and for investment and growth too,” the Chancellor will say.
She is expected to add: “We must deal with the Tory legacy and that means tough decisions. But we won’t let that dim our ambition for Britain.
“So it will be a budget with real ambition. A budget to fix the foundations. A budget to deliver the change we promised. A budget to rebuild Britain.”
In a signal of Labour keeping its manifesto commitments, Ms Reeves will promise not to raise national insurance, income tax and VAT.
She will also say corporation tax is to remain at its “current level for the duration of this Parliament”.
Jeremy Hunt, the shadow chancellor, contested Labour’s assessment of the UK economy, and claimed Ms Reeves had “already damaged the UK’s international reputation by talking down her inheritance in order to score political points”.
He added: “If she believes in growth, where is the plan? People are beginning to suspect there may not be one.“If all we get in the Budget is tax rises and employment laws that deter investment and job creation she will have thrown away a golden opportunity.”
Monday will also see delegates to the party’s annual conference debate Labour’s economic plans, with the decision to remove winter fuel payments from 10 million pensioners set to feature.
The exact wording of the motion delegates will vote on will be determined on Sunday night, but trade unions Unite and the Communication Workers Union have put forward proposals calling for the policy to be scrapped.
Unite has already unveiled billboards around Liverpool with the slogan “Defend the winter fuel payment” and plans to stage a demonstration outside the conference centre ahead of the debate on Monday.
The union’s general secretary Sharon Graham described the policy as “cruel” and a “mis-step”, while Matt Wrack, the head of the Fire Brigades Union, said it was a “politically inept” decision that would “haunt” the Government for years.
Restricting winter fuel payments to only the poorest pensioners has put the Government at odds with the unions as Ms Reeves attempts to fill what she claims is a £22 billion “black hole” in this year’s budget left by the Conservatives.
But Tory shadow ministers insist there was no “black hole” and the Government is merely preparing the ground for tax rises when Ms Reeves announces her first Budget on October 30.
Both the Unite and CWU motions include call for the winter fuel payments to be restored to all pensioners, but address wider economic policy as well.
Unite’s motion calls for a wealth tax on the richest 1 per cent of people and other changes to the tax regime that the Government has so far been keen to avoid.
The motion said: “Britain cannot wait for growth, nor turn back to failed austerity. We need a vision where pensioners are not the first to face a new wave of cuts and those that profited from decades of deregulation finally help to rebuild Britain.”
Both unions also called for reform of the Government’s fiscal rules to allow more borrowing to invest in public services and infrastructure, something the Chancellor has also faced pressure to do in order to kickstart economic growth.
But Ms Reeves has been adamant that her fiscal rules are non-negotiable, saying she must demonstrate tight control over the public finances.
