The comments made by Rachel Reeves, the Shadow Chancellor of the Exchequer, on 14 October 2022.
This humiliating u-turn is necessary – but the real damage has already been done.
This is a Tory crisis, made in Downing Street.
It won’t be forgiven or forgotten.
Only a Labour government has the credibility and authority to fix this mess.
The speech made by Rachel Reeves, the Shadow Chancellor of the Exchequer, in the House of Commons on 12 October 2022.
People are facing insecurity, instability and deep anxiety and they deserve answers. Conservative economic policy has caused mayhem with financial markets, pushed up mortgage costs and put pension funds in peril, and it has wiped £300 billion off the UK’s stock and bond markets—all directly caused by the choices of this Government. The mini-Budget, just 19 days ago, was a bonfire made up of unfunded tax cuts, excessive borrowing and repeated undermining of economic institutions. It was built and then set ablaze by a Conservative party totally out of control—not “disrupters” but pyromaniacs. And that fire has now spread. Yet Government deny all responsibility.
So will the Minister tell the House, what guarantees will the Government give that the currency slide will stop, and that people’s pensions are safe? How do they expect people to pay £500 more a month, on average, on their mortgages? How many more repossessions of family homes will there be if the Government do not change course? How much more are the Government spending on debt interest because of higher borrowing costs?
While Ministers desperately try to blame global conditions, why is it that no other central bank in the world has had to step in three times in less than three weeks to protect financial stability?
The country now faces a very serious situation. Ahead of the ending of the Bank of England’s emergency operations this Friday, what action will the Government take to ensure that their Budget does not have further consequences for financial stability, or for people’s pensions?
This is a Tory crisis made in Downing Street, but it is ordinary working people who are paying the price. It can be resolved only when the Conservatives put aside their pride and reverse this catastrophic mini-Budget, and they must do so now.
Chris Philp
The shadow Chancellor calls for a reversal of the growth plan, yet at the first opportunity—last night—the Labour party voted for it. She asks about mortgage rates, so let me point out to her that mortgage rates around the world have been on an upward trajectory all year. In fact, if we compare base rates in the United Kingdom with those in the United States, we see that in both countries, as she will be aware, the base rate started this year at 0.25%. In the UK the base rate is currently 2.25%, and in the US it is 3.25%, a full percentage point higher.
The shadow Chancellor referenced borrowing costs. I am sure she is aware that two-year Government bond yields are about the same in the US as they are in the UK—US bond yields have been going up over the course of this year as well. She referenced the currency: the dollar has shown strength against a basket of currencies throughout this calendar year. If she looks at the dollar strengthening against the euro, she will see that it strengthened about 15% this calendar year, and strengthened about 15% against sterling—very similar figures.
The shadow Chancellor also asked about the cost of living. We are very mindful of that, which is why we have introduced a £37 billion package to help people, disproportionately targeted at those on lower incomes, so that people on the lowest third of incomes receive £1,200. It is why we introduced the energy price guarantee on our second or third day in office, ensuring that people do not pay, on average, more than £2,500, instead of facing bills of £5,000 or £6,000—and not for six months, as the Labour party offered, but for two years. It is why the national minimum wage was increased by a large amount last April. It is why the national insurance threshold was increased to £12,500 in July, so people on lower incomes now pay virtually no national insurance or income tax. That is the package of measures that this Government have introduced, because we stand on the side of working people and have taken the steps needed to support them.
The speech made by Rachel Reeves, the Shadow Chancellor of the Exchequer, in the House of Commons on 23 September 2022.
Thank you, Mr Speaker.
I would like to welcome the Rt Hon Gentleman to his place and I thank him for his statement.
He is the third Conservative Chancellor this year – and it’s still only September.
The Chancellor has confirmed that the costs of the energy price cap will be funded by borrowing, leaving the eye-watering windfall profits of the energy giants untaxed.
The oil and gas producers will be toasting the Chancellor in the boardrooms as we speak – while working people are left to pick up the bill.
Borrowing higher than it needs to be, just as interest rates rise.
And yet the Chancellor refuses to allow independent economic forecasts to be published which would show the impact of this borrowing on our public finances on growth and inflation.
It is a budget without figures.
A menu without prices.
What, Mr Speaker, has he got to hide?
This statement is an admission of 12 years of economic failure.
And now here we are – one last throw of the dice, one last claim that these ministers will be different.
For all the chopping and changing and chaos and confusion there has been one person here throughout.
The Prime Minister.
She’s been a minister for a decade, out defending every single economic decision.
When the Prime Minister says she wants to break free from the past, what she really means is she wants to break free from her own record.
Because where have the last 12 years left us?
Lower growth, lower investment, lower productivity.
And today, we learn we have the lowest consumer confidence since records began.
The only things that are going up are inflation, interest rates and bankers’ bonuses.
As the Tories become more and more detached from reality millions of people are lying awake at night worrying about how they’ll make ends meet.
Labour won the argument that action on energy bills was necessary.
But the question is: who pays?
The energy producers who have profited so much from the rise in prices should make a contribution.
But when the country asked who should foot the bill for their energy rescue
package the Conservatives responded: “you”, the British people.
Instead of standing up for working people, the Conservatives chose to shield the gigantic windfall profits of the energy giants leaving tens of billions of pounds on the table and pushing all the costs onto borrowing to be paid for by current and future taxpayers.
This Prime Minister and Chancellor have no regard for taxpayers’ interests or the concerns of working people.
It’s not just that this Conservative government is not working for ordinary families – it’s actively working against them.
Mr Speaker, we have had six so-called growth plans from the Conservatives since 2010.
A litany of failure.
I do at least commend the Chancellor on having the ambition of achieving two and a half percent growth a year – the last Labour government’s rate of growth.
But to achieve that sort of growth and for that growth to be sustainable, you need a credible plan.
And the truth is that this government does not have one.
The Prime Minister and Chancellor are like two desperate gamblers in a casino, chasing a losing run.
The argument peddled by the Chancellor today isn’t a great new idea as much as he’d like us to think so.
What this plan adds up to is to keep corporation tax where it is today and to take national insurance, which they voted to increase, back to where it was last March.
Some new plan!
And it’s based on an outdated ideology that says if we simply reward those who are already wealthy, the whole of society will benefit.
They’ve decided to replace levelling up with trickle down.
As President Biden said this week, he is “sick and tired of trickle-down economics.”
And he is right to be.
It is discredited, it is inadequate and it will not unleash the wave of investment that we need.
Mr Speaker, it’s not just this side of the House with concerns.
The Rt Hon Member for Surrey Heath, described the Prime Minister’s economic plans as ‘taking a holiday from reality’.
The Rt Hon Member for Richmond, two Chancellors ago, was perhaps too honest with his party when he told them:
“We tried having a … low corporation tax … as a means of getting businesses to invest.”
But that “It has not worked.”
The new Chancellor and Prime Minister used to agree with that.
They voted for the corporation tax rise, and Labour supported it too.
Members opposite might have changed their minds, but we have not.
Because the evidence shows that low rates of Corporation Tax are not the best way to boost investment and productivity and the Tories’ own record shows that.
Britain has the lowest headline rate of corporation tax in the G7 but we also have the lowest rate of private investment.
That’s why Labour would do what businesses are actually asking for:
Using targeted investment allowances to boost productivity and growth.
And scrapping outdated and unfair Business Rates, that harm our small businesses and high streets replacing them with a system that’s fit for the 21st Century.
What about their other policies?
Let’s take these so-called ‘investment zones’.
Again, these are nothing new.
Every time they were tried, all they have achieved was moving growth around
the country, not creating growth.
The best way out of this high tax, low growth spiral that the Tories have created is to get the economy firing on all cylinders in all parts of the country.
It’s going to take much more than a stamp duty cut to get our economy back on track and home ownership back to the levels last seen under the Labour government.
These stamp duty changes have been tried before.
Last time they did it, a third of the people who benefited were buying a second or third home, or a buy to let property.
Is that really the best use of taxpayers money when borrowing and debt are already so high?
And can the Chancellor confirm today how much of his stamp duty cut will go to those purchasing multiple properties?
Instead of a stamp duty rates going up and down like a yo-yo, we’ve got to get building.
We need to target support at first time buyers and tackle the issue of homes being sold to overseas investors.
The Chancellor has made clear today who his priorities are. Not a plan for growth, a plan to reward the already wealthy.
A return to the trickle down of the past, back to the past, not a brave new future.
This Chancellor and Prime Minister proclaimed in Britannia Unchained that ‘the British are amongst the worst idlers in the world’.
And to prove they mean it, instead of supporting working people this government is cutting their rights at work.
Working people are the backbone of Britain and should be respected not sneered at.
Labour will always stand up for their rights.
The Chancellor has in effect today admitted he has broken his fiscal rules.
This is the 10th time the Tories have broken their own rules, something that I’m sure the Office for Budget Responsibility would have confirmed if they had been allowed to publish their forecasts today.
Mr Speaker, it is unprecedented to have a fiscal statement of this scale with no independent forecasts from the Office for Budget Responsibility.
Never has a government borrowed so much and explained so little.
Economic institutions matter.
Yet this government has undermined the Bank of England, sacked the respected Permanent Secretary at the Treasury and silenced the Office for Budget Responsibility.
That is no way to build confidence.
This is no way to build growth.
Mr Speaker, Labour believes in wealth creation.
We will always support enterprise, creativity and hard work.
We want British businesses to grow, to be successful and contribute to our wider prosperity.
We don’t believe – as the Chancellor and Prime Minister do – that British workers are idlers.
We understand that it is the workers who turn up every day to make the great product at a factory or deliver a great service in the store who generate growth.
It is the teachers giving the young people the skills they need.
It is the doctors and nurses keeping people well.
It is the entrepreneur taking a personal risk to start a new business.
These are the people who generate growth – and they all deserve to share in it too.
Mr Speaker this statement is more than a clash of policies.
It is a clash of ideas – two different ideas of how our country prospers.
If you’re a pensioner worried about the cost of living, a working family seeing your mortgage costs going up or a small business owner whose costs are spiralling, the government’s announcements today do little to reassure you.
Bigger bonuses for the bankers and huge profits for energy giants, shamelessly shielded by Downing Street.
And all the while, ministers pile the crushing weight of all these costs onto the backs of taxpayers.
The Conservatives can’t solve the cost of living crisis.
The Conservatives are the cost of living crisis.
And our country cannot afford them anymore.
The speech made by Rachel Reeves, the Shadow Chancellor of the Exchequer, on 26 September 2022.
Thank you, Conference.
It is a privilege to stand here as your Shadow Chancellor, under Keir Starmer’s leadership. But I know what a responsibility this is too. We are facing a national emergency.
Energy prices, up. The cost of the weekly food shop, up.
People’s wages not keeping up.
On Friday, the Chancellor had an opportunity to set out a serious response to the cost-of-living crisis.
And he failed.
What did we get instead? A tax cut for the wealthiest one percent. Increased bankers’ bonuses.
And more than £50 billion piled onto the national debt every single year, because of their reckless decision to put all the costs onto borrowing.
They didn’t just break their own fiscal rules for the tenth time in twelve years. In one go, they borrowed more than in any budget since 1972, with inflation already high, and interest rates already rising.
The message from financial markets was clear on Friday and this morning that message is even more stark: Sterling is down. That means higher prices as the costs of imports rise.
The cost of government borrowing is up, that means more taxpayers’ money will go into paying the interest on government debt.
And in turn, that means the cost of borrowing for working people will now go up too, with higher mortgage repayments for families.
And all for what?
Not to invest in the industries of the future. Not for our NHS. Not for our schools. But for tax cuts for the wealthiest. A return to a trickle-down idea that has been tried, has been tested, and has failed.
Why should my constituents in Leeds West pay for tax cuts for those who are already the wealthiest? It’s not what anyone voted for. It’s putting our economy in danger.
And Labour will fight it every step of the way.
Let me tell you what I believe: I believe that hard work should be met with fair reward. I believe that strong public services are the backbone of any decent society. I believe that inequality divides and holds us back as a country. I believe that the task of building a fairer society is a moral responsibility.
And more than that: it is the route to a stronger economy. That truth is at the heart of Labour’s plans for growth.
Today, I want to tell you why.
Last April, on a cold spring evening, I knocked on the door of a pensioner in my constituency.
When I reached out to shake her hand, it was purple and freezing cold.
Already back then, she was afraid to put the heating on, struggling to get by on the small pension that she had built up through a lifetime of work.
As energy bills and inflation rise even higher, I often think of her.
That is the stark reality facing people all around our country today.
While the Prime Minister spent months denying the need for action on energy prices, Labour was calling for a freeze on the energy price cap. Labour was calling for an end to the indefensible premium paid by families with pre-payment meters. And crucially, Labour was calling for a windfall tax on the unimaginable profits being made by oil and gas companies, so that working people didn’t have to foot the bill.
But the Prime Minister is content to let energy giants pocket the cash, and leave your children and your grandchildren to pick up the tab.
Under these Tories, those with the broadest shoulders carry the lightest load. And not by accident, but by choice.
It is time for a government that is on your side, and that government is a Labour government.
The effects of Putin’s war have reverberated around the world, and we will not waver in our support for Ukraine.
The causes of this crisis are global. But our unique exposure to rising energy prices is a result of the choices of Conservative governments.
Inaction on insulating homes. Inaction on nuclear and renewable energy. And the sheer irresponsibility of closing our gas storage facilities.
We are feeling the consequences of a twelve-year Tory experiment, in unilateral energy disarmament. And what’s their answer?
Lifting the ban on fracking.
Fracking is dangerous. It is bad for the planet. It won’t even reduce our bills.
And with Labour it will not happen.
Here is our alternative. Our Green Prosperity Plan, to provide the only sustainable solution to the energy crisis. To free ourselves from dependence on Russia. To invest in solar, in wind, in tidal, in hydrogen, and in nuclear power. And to pass onto our children a fairer and a greener country.
This is a moral responsibility. And it’s an economic necessity.
On climate change, the costs of inaction today will mean far greater costs tomorrow. I refuse to leave our children to pick up the pieces of our failure.
I will be a responsible Chancellor. I will be Britain’s first green Chancellor.
Ed Miliband has just set out how the next Labour government will cut energy bills for good by generating all of our electricity from clean sources by 2030.
But our Green Prosperity Plan is about something else too: it is about economic growth. Because British businesses are falling behind in a global race for new industries.
And that matters.
It matters that the largest offshore wind farm in Scotland has its blades made not in Scotland but thousands of miles away.
It matters that the rest of Europe is powering ahead with electric battery factories, and we are stuck in the slow lane.
It matters that Germany, France, and the US are making the running with green hydrogen but we are not.
We have the ability. But we want the jobs here. We want the factories here. And we want British businesses to take the lead.
Here is the deal:
The next Labour Government will create a National Wealth Fund, so that when we invest in new industries.
In partnership with business, the British people will own a share of that wealth, and the taxpayer will get a return on that investment.
Wealth flowing from jobs in electric battery factories, in the West Midlands, the North East, the North West, and the South West.
Offshore wind driving investment in our ports: from the Humber to Southampton, East Anglia to Belfast.
Clean steel with jobs in Rotherham, Sheffield, Scunthorpe, Cardiff, and Port Talbot.
And carbon capture and storage in our industrial heartlands, in Grangemouth and in South Wales, in Humber and in Teesside, and here in Merseyside too.
Because when I say I want to buy, make, and sell more in Britain, I mean it.
What you will see in your town, in your city, with Labour is a sight we have not seen often enough in our country.
Cranes going up, shovels in the ground. The sounds and the sights of the future arriving.
Secure, skilled jobs, for plumbers, electricians, and joiners, for designers, scientists, and engineers.
Wealth that will flow back into your community and onto your high street. Wealth that the British people will own a stake in.
Wealth that is invested in our country’s future. That is a real plan for the climate. That is a real plan for growth.
And that is a real plan for levelling up. A zero-carbon economy – made right here. Made in Britain.
It is time for a government that is on your side, and that government is a Labour government.
And what about the Tories? Six different plans for growth in twelve years, each announced to great fanfare. Each making no difference.
A library of failure. They’ve had twelve years.
Have they got growth up? No.
Have they got inflation down? No.
Have they got child poverty down? No.
Have they got NHS waiting lists down? No.
Have they even got the debt and deficit down? No.
It’s twelve years of failure.
And now?
They have replaced ‘levelling up’ with ‘trickle down’. An economic philosophy inadequate to a modern world, and a moral philosophy inadequate to a decent society.
Trickle-down economics is a very simple idea. That if we just slash taxes and regulation, we will ‘unleash’ business investment and growth. That how wealth is shared doesn’t matter.
That vast gaps between people and places are of no importance. That workers’ rights, consumer protections and strong public services are all worth sacrificing.
That wealth is only created by a few people and a few businesses. It is why at the same time that ministers lecture low-paid workers about showing restraint, they can’t restrain themselves from removing the cap on bankers’ bonuses.
I dare any Tory MP to tell a nurse or a care worker to their face, that what our country really needs right now is bigger bonuses for bankers.
Trickle down is a very simple idea – and a very wrong one. Not just wrong because it isn’t fair. Wrong too because it doesn’t work.
Trickle down is wrong because how wealth is shared does matter to growth. High inequality strangles the spending power of working people, it piles its social costs onto our public services, and it suffocates potential.
Trickle down is wrong because, in a turbulent world, businesses need government as a partner. Trickle down is wrong because strong institutions and robust public finances provide the foundations for a strong economy.
And trickle down is wrong, because a strong economy needs strong public services.
We will defeat the failed ideas of the past, with the focus, the ambition, and the ideas for the future.
Here’s the truth:
Wealth doesn’t trickle from the top down. It comes from the bottom up, and the middle out.
From the talent and the effort of tens of millions of ordinary people, and from thousands of businesses. Our economy needs the most productive, most high-tech businesses to thrive in Britain.
And we all rely on what I call the everyday economy, on transport workers and delivery drivers, our supermarket and retail workers, our NHS and care workers. Don’t let anyone tell you that they are not wealth creators too.
They are key to our security as a society. And yet too many of them are among the most insecure.
Overworked. Underpaid. Undervalued.
The Tories’ trickle-down ideology has nothing to offer them, beyond longer hours, lower pay, and less respect.
Earlier this year, I met a young family in Worthing. A mum and dad, working five jobs between them, struggling to make ends meet, constantly juggling work and childcare.
As a family, they only get half a day a week together. They felt that any hope of buying their own home had evaporated. Good people, working hard.
And do you know what the mum said to me? She said: ‘you just wonder if you’re doing something wrong.’
Something is profoundly wrong.
And let’s be clear, Liz Truss: we’ve not fallen behind our neighbours, on growth, on productivity, and on pay, because British workers lack ‘graft’.
It’s not working people that are the problem. It’s this government that is the problem.
I’ll tell you what a growing economy needs. Rising wages, so that money flows back into vibrant high streets.
Parents with the time to thrive at work and spend time with their children.
Families with enough savings to weather a storm.
And people feeling the confidence to take risks, to change career, to learn new skills, or to start a business.
So, with Labour, there will be no bonfire of workers’ rights as the Tories intend. As Angela Rayner announced, we will introduce a new deal for working people, with strengthened rights fit for the times we are in.
And that’s not all.
On day one as Chancellor, I will write to the Low Pay Commission, with a simple instruction:
that the minimum wage will be set at a level that reflects the real cost of living.
The last Labour government delivered Britain’s first national minimum wage.
The next Labour government will introduce a genuine Living Wage. That’s how we will give working people respect. That’s how we will give working people security.
And that’s how we will grow our economy too. It is time for a government that is on your side. And that government is a Labour government.
Here’s another thing about growing a 21st century economy:
It is no longer enough – if it ever was – for government to simply get out of the way. The challenges of global instability, of pandemics, wars and climate crisis, demand that government works in partnership with business.
If I were Chancellor right now, I would bring together a National Economic Council that will bring together industry and trade unions, so working people and businesses were at the heart of economic decision-making.
I have been privileged to visit businesses across our country. From Rolls Royce in Derby – pioneering research into carbon neutral aviation, to Oxford Nanopore – leading work on DNA and RNA sequencing.
Right through to local businesses, like Castleton Mill – once a key part of West Yorkshire’s textiles industry, and now a collaborative space for freelancers, remote workers and start-ups.
The world is changing fast but the British capacity for enterprise, for innovation, and for hard work remains undimmed. When I talk to businesses, they don’t tell me that their priority is corporation tax.
They tell me about the need for properly targeted investment allowances, the need for workers equipped with the right skills, the need for certainty and a sense of direction from government, and yes – the need for a sensible working relationship with our European neighbours.
So we will take those issues head on. Starting with the biggest tax problem facing British businesses. Our unfair, outdated system of business rates punishes high street businesses to the advantage of online giants.
So Labour will level the playing field. We will abolish business rates, and replace them with a fairer system fit for the 21st century.
That new system will mean that businesses would get revaluation discounts straight away, rather than waiting years for their money back.
And here’s more.
Today, Jonathan Reynolds launched our modern industrial strategy, that recognises the importance of businesses at the high-tech frontier and of our everyday economy.
It sets out a mission to make our economy more secure. We will use all powers at government’s disposal to buy, make and sell more here in Britain.
We will make Britain the best place to start and to grow a business, guided by the work of our start-up review, headed by Lord Jim O’Neill.
And we will give our nations and regions, mayors and local leaders, right across Britain, the tools to shape their own future.
In Labour-run Wales, under Mark Drakeford, in our city regions, and all around the country, we are seeing the difference that Labour can make in power.
And Steve Rotheram thank you for the leadership you show here in Merseyside.
If you are remotely serious about growth, then you have got to make Brexit work. Our agriculture and our food industries rely on trade right across Europe, but we have a deal which doesn’t even include a veterinary agreement.
We are pioneers in creative industries, but we have a deal which ties them in knots over visas. We are the second largest exporter of services in the world, but we have a deal that doesn’t include the mutual recognition of professional qualifications.
So we will fix the holes in the government’s patchwork Brexit deal. And instead of picking needless fights with our largest trading partner, we will work together with our neighbours and allies, in our national interest.
That is Labour’s approach: proudly pro-worker and proudly pro-business.
Supporting innovation. Sharing opportunity. Reviving our high streets.
It is time for a government that is on your side, and that government is a Labour government.
I am proud to have started my career as an economist at the Bank of England.
Its operational independence is an enduring contribution by the last Labour government to Britain’s financial stability.
Growth and social justice must be built on the firmest of foundations. Yet this government has undermined the Bank’s independence, sacked the respected Permanent Secretary to the Treasury, and gagged the Office for Budget Responsibility.
The Chancellor and the Prime Minister, meanwhile, resemble two desperate gamblers in a casino, chasing a losing run. But they’re not gambling with their money, they’re gambling with yours.
They’ve lost credibility they’re losing confidence, they’re out of control.
I have said this before, and be in no doubt: there can be no return to austerity.
It has left our country poorer, our public services at breaking point, and our public finances in tatters.
I make this promise to you: Labour will not waver in our commitment to fiscal responsibility.
That is why I set out the fiscal rules for the next Labour government a year ago. Every policy that Labour announces – and every line in our manifesto – will be carefully costed and fully funded.
Last year, I told this conference that I was more than happy to take on the Tories on economic competence, because I know we can win.
I’m now wondering if they even plan to turn up for the fight. It is becoming clearer by the day that Labour is the party of economic responsibility and the party of social justice.
It is time for a government that is on your side, and that government is a Labour government.
We need a growing economy to pay for modern, sustainable public services.
But a growing economy needs strong public services too. This is personal to me.
My mum and dad were primary school teachers. I’m really proud of that.
My sister Ellie and I used to play for hours in my dad’s classroom, while he worked late into the evening, because he wanted to give the kids he taught the best start in life.
All in the face of Conservative governments hostile to the very idea of public service. I went to school under those governments. I remember what that was like.
It is why I joined this party. And it is why I am here today. Strong public services are the foundation of a strong society.
And we owe everything to those who work in our NHS. But we also know, that our health service today is on its knees.
It is a social priority. And it is an economic priority.
In the last three years, half a million people have left the labour market, more than half of those due to long-term illness.
So – as Keir Starmer announced a year ago, we will guarantee access to mental health treatment within a month to anyone who needs it.
Here’s more. We need strong, sustainable public finances alongside strong, sustainable public services, so our priority is not tax cuts for the wealthiest few.
It is securing our public finances and investing in public services.
I can tell you: with a Labour government, those at the top will pay their fair share. The 45p top rate of income tax is coming back. Here’s what we will do with that money.
The next Labour government will double the number of district nurses qualifying every year, train more than 5,000 new health visitors, and create an additional 10,000 nursing and midwife placements every year.
More than that we will implement the biggest expansion of medical school places in British history, doubling the number of medical students, so our NHS has the doctors it needs.
It will fall to us to fix the damage the Tories have done. We have done it before, we will do it again.
Know that these are Labour’s priorities. Strong public services, to support people, and grow our economy.
A greener, fairer Britain, with jobs for people in Britain, industries owned by the people of Britain, profits shared by the people of Britain.
Pro-business and pro-worker for a stronger economy, where you do well. Because when you do well, Britain does well.
Hope and opportunity, whoever you are, wherever you live. That is Labour’s vision for Britain. That is what we are fighting for.
It’s time for a government that is on your side.
That government is a Labour government.
And be in no doubt, that government is on its way.
Section of the article written by Rachel Reeves, the Shadow Chancellor of the Exchequer, in the Yorkshire Post (full article here) on 6 August 2022.
The Tory leadership favourite pledged to slash £8.8bn from the pay of our hardworking nurses, teachers, police officers and armed forces – cutting their salaries by an average of £1,500 a year.
What’s worse, her plan would’ve meant lower pay for public sector workers in the North, and higher pay for those in London and the South East. How absurd is that.
After a backlash her campaign tried to claim she was misrepresented, but the truth is that Liz Truss called for this policy as far back as 2018 when she was a Minister in the Treasury. It’s clear this is not only what she said but what she really believes.
The speech made by Rachel Reeves, the Shadow Chancellor of the Exchequer, on 13 July 2022.
Thank you.
I want to pay tribute to the work of the Economy 2030 Inquiry.
Today’s report strikes not just at the truth that our economic problems are deep-rooted but that they are far more than an abstract question of lines on a chart.
That it is questions of growth, productivity and inequality which underlie the sense that Britain isn’t working for far too many people.
As many of you will know, I’m an economist by trade, spending the best part of a decade at the Bank of England.
But I’m also a politician, so let me spend a few moments on the political situation we find ourselves in.
Because the tables have turned.
On the day the Prime Minister finally announced his intention to stand down, I was in Leeds, meeting business leaders.
What I heard from them was what I have heard repeatedly over recent weeks:
That political instability at the top is a major drag on market confidence – and the last week has shown us something else about this government.
Because any lingering sense that the Conservatives are the party of economic responsibility has been shredded to pieces over the past few days.
Instead of setting out serious plans to help people with the cost of living crisis, just as we hear terrifying estimates of how much energy bills will go up again in October, we are presented with the extraordinary spectacle of a Tory tombola of tax cuts – with no explanation of what public services will be cut, or how else they’d be paid for.
Honesty and integrity matter in politics, not just when it comes to parties and rule breaking but also when it comes to economic policymaking.
The level of unfunded tax cuts being bandied about this week would blow a massive hole in the public finances.
Every single Conservative leadership candidate supported the government’s fiscal rules when they were passed into law in January, but now they are prepared to take a flamethrower to them.
I’ve set out the fiscal rules which will bind the next Labour government.
Rules which I will stick to with iron clad discipline.
Because responsible management of our public finances is the only route to providing the strong foundations we need to reboot our economy, revitalise our public services and re-energise our communities.
They will be paired with an absolute commitment to ending the shocking levels of waste and fraud we’ve seen under this government strengthened by the creation of a new Office of Value for Money, .to make sure every pound of taxpayers’ money is treated with the respect it deserves.
Back in September I said that I am more than happy to take on the Tories when it comes to economic competence because I know we can win. If didn’t know then that they wouldn’t even bother putting up a fight.
It is important that we put this moment in wider context.
Because we face a succession of long-term economic challenges – low growth, flatlining productivity, stagnant wages, and now soaring inflation.
Under the last Labour government, the UK economy grew at an average of 2.1 percent a year, allowing us to deliver the biggest boost to investment in public services in our lifetimes.
But since then, growth has averaged just 1.5 percent a year.
We shouldn’t kid ourselves that this is solely a product of global trends.
The UK had the second lowest productivity growth in the G7 in the 2010s and, as today’s report shows, the UK’s productivity gap with France and Germany has almost trebled since 2008 – equivalent to an extra £3,700 in lost output per person.
Stagnation isn’t inevitable.
Our capacity for innovation, enterprise and old-fashioned hard work remains undiminished.
Britain has huge opportunities if only we have a government that can bring the country together in a spirit of national purpose.
But the only alternative to a high-tax, low-growth, high-inflation economy is a serious plan.
Let me tell you what that involves.
It means addressing our deep-rooted supply-side problems which have contributed to low growth and stalling productivity and are a major factor in the spiralling inflation rates we’re seeing.
In America, Treasury Secretary Janet Yellen has called this approach “modern supply side” economics.
It’s based on the knowledge that government plays a crucial role in bringing about economic growth and tackling the structural challenges that have held us back
My vision for a modern supply side economics for the UK involves three key things.
First, we need to make sure people can realise their potential and play an active role in a growing economy.
For all ministers’ talk of a jobs miracle the reality is we have a hidden worklessness crisis with employment lower than before the pandemic at a time of record vacancies, and a million people missing from the workforce relative to pre-pandemic trends.
That is why my colleague Jonathan Ashworth this week outlined plans from better links between employment and health services, to flexible working, and reforming how our job centres operate to help people return to work where they can.
Fundamental to strengthening our supply of labour is supporting parents to work.
That means urgently addressing the cost and availability of high-quality, affordable and flexible childcare.
Second, we need to support British businesses to thrive – working in partnership to get the economy growing again and provide the good jobs we need.
That will rest on a modern industrial strategy on our plan to use all the tools at government’s disposal to buy, make and sell more in Britain, and on our Climate Investment Pledge – which will help create new markets and leverage in private investment, and drive carbon emissions down.
Today’s Resolution Foundation report argues forcefully – and rightly – that we must play to Britain’s strengths.
We are the second largest exporter of services in the world and pioneers in creative industries.
We should be proud of those strengths.
That is why it is beyond belief that the Tories delivered a Brexit deal that hurts our creative and service industries.
So we will address these flaws building on the deal, ensuring at a minimum we agree the mutual recognition of professional qualifications and negotiate an EU-wide cultural touring arrangement.
And third… we need to support great British entrepreneurs.
Which is why, last month, I announced the launch of a new review, led by a panel including Lord Jim O’Neill to map out how we can build the institutional ecosystem that ensure new and growing businesses have what they need to flourish here in the UK.
This approach – a new, ‘modern supply side’ economics – comprises an ambitious plan for growth grounded in the realities of the world in the 2020s, not in Tory Party fantasy which would result in higher borrowing, increased mortgage rates, and cuts to our schools, hospitals and police.
Labour’s alternative is based on partnership between government and business – working for sustainable growth felt in every part of the country with a serious plan and the determination to deliver it, built on the strong foundations provided by our fiscal rules.
Committed to honesty and integrity, because they are important virtues in public life, and because they are essential to a growing economy with stronger public services and higher living standards for all.
Thank you.
The speech made by Rachel Reeves, the Shadow Chancellor of the Exchequer, to the Times CEO Summit in London on 16 June 2022.
Thank you Dominic, and thanks to the Times for hosting us today.
Since being appointed Shadow Chancellor I have had the privilege to visit inspiring British businesses.
From Castleton Mills, once a key part of West Yorkshire’s textiles industry – now reimagined as a creative, collaborative space housing freelancers and start-ups.
To world-recognised names like Rolls Royce in Derby – leading pioneering research to develop carbon-neutral aviation.
And Oxford Nanopore, one of our leading technology and life science firms.
Britain has huge economic strengths. Our leading universities, our language, our geography, our excellence in sectors from financial services to life sciences to cultural industries.
But questions of wealth creation have become too marginal to our politics.
After starting my career as an economist at the Bank of England, I spent several years at HBOS in Halifax.
I know what business can bring. Not just in prosperity and work which pays well – but in pride and identity.
After a decade in which people have seen their incomes stagnate and their public services cut to the bone, I don’t only see the task of building a more just society as a moral responsibility – though it is that – but also as the route to a dynamic economy with wealth creation at its core.
Through which opportunity is widely shared, and through which we can break out of our cycle of low growth, low productivity and underinvestment.
Labour is pro-worker and pro-business in the knowledge that the success of both is crucial to our country’s economic success.
A new partnership between government and business will be the foundation of everything the next Labour government will hope to achieve.
This a challenging moment.
The politics of stagflation and energy security have come to the fore for the first time in half a century.
But this present crisis is just the latest chapter in a longer economic story. Between 1997 and 2010, the UK economy grew at an average of 2.1 percent a year, but since then, growth has averaged just 1.5 percent a year.
And now the OECD forecasts that the UK will have zero growth next year – putting us behind every G20 economy bar Russia.
I don’t accept that economic decline is an inevitability.
But we do face a succession of challenges if we are to return to strong growth and shared prosperity.
Our success will rely on the leadership of both government and business.
I know businesses increasingly recognise their wider role in strengthening our economy and society.
But there is an onus on government to rethink too.
It is no longer enough – if it ever was – for government to simply get out of the way.
In America, the Biden administration is taking a more active role in tackling structural economic weaknesses. US Treasury Secretary Janet Yellen calls this approach ‘modern supply side economics.’
For the next Labour government, such an approach will mean government applying itself more concertedly to driving up the productive potential of our economy. By boosting labour supply through providing workers with the skills, healthcare, and childcare they need to flourish. By using its power of procurement to support businesses here in Britain. And as a strategic partner of business.
Let me talk more about that final point – strategic partnership.
I want to see UK companies thrive, to see great ideas come to fruition and for the UK to be a great place in which to invest.
But I don’t believe all that happens in a vacuum.
The state has to be active in fostering the conditions for our country to prosper, whether that is in sponsoring world leading research, getting the regulatory environment right, or in helping bridge the gap between a fantastic concept and the reality of its commercial production.
The last Labour Government developed an active industrial strategy on these lines – and for all my differences with the the Cameron and May governments, their efforts to continue this work were welcome.
But now these efforts have been abandoned – and the industrial strategy scrapped.
And for no clear reason, other than an ideological objection.
Ideology won’t help great British companies, but good partnership will.
That’s why Labour will bring local, regional and national leaders together with businesses, workers and universities to support the growth of high-tech, competitive industries of the future. And to map out a better way forward for the high-employment, low-productivity sectors on which we all rely – what I call the everyday economy.
But an approach to strategic partnership can’t stop there.
I agree with the director of the CBI, Tony Danker, that what is required to break us out of our cycle of underinvestment and low productivity is ‘catalytic public investment’.
Labour’s climate investment pledge would provide just that, and crowd in private sector investment – to create new markets and bolster existing ones.
And a modern supply side approach cannot and must not ignore the task of making Brexit work for British businesses and consumers.
So we must address the flaws in the Brexit deal hitting our food and drinks manufacturers, creative industries, professional services and more – through repairing and strengthening our supply chains, and building on the UK-EU trade deal to cut red tape for exporters.
We need to adopt an approach that seeks to solve problems in a practical way for UK companies, and aims to build trust – rather than continually retreating to the issue of Brexit as a domestic political wedge.
Any competitive market economy must offer opportunities for new, innovative and agile businesses to flourish.
Innovation is a great British strength. It’s in our DNA.
We have immense resources in the creativity and drive of our entrepreneurs, and the innovative capacity of our universities.
Fast-growing firms already contribute £1 trillion to our economy and employ 3.2 million people.
But something I have heard repeatedly is a real worry about the stubborn obstacles preventing many of them from scaling up, and the small number of start-ups listing in the UK.
Labour’s mission is to build an institutional ecosystem enabling the market access, finance, and skills that new and growing businesses need.
So today I am launching a review, led by a panel of entrepreneurs and experts including the economist and former Treasury Minister Lord Jim O’Neill, and tasked with charting a course to ensure Britain is the best place to start and to grow a business.
The review will be given a remit to ask the difficult questions and present solutions – about the incentives for growing businesses here compared with other countries, about access to capital – especially patient capital, about the skills, structures and incentives presented to our universities to spin out new businesses, and about how we extend opportunities to a more diverse range of entrepreneurs.
I consider it a key task for the next Labour government – a central part of a modern supply side approach – to provide answers to those questions, and to unleash the next generation of innovators and wealth creators.
The method I have outlined today is a modern supply-side approach, with government as a provider economic security, enabler of a highly-skilled workforce, and a strategic partner to business.
The object is a stronger society – underpinned by a thriving market economy in which opportunity is shared widely.
But to realise this, we need a different kind of leadership. Upholding strong institutions, practising transparent decision-making, and showing respect for business.
Keir Starmer’s Labour Party – proudly pro-worker and proudly pro-business – will offer that leadership.
Thank you.
The comments made by Rachel Reeves, the Shadow Chancellor of the Exchequer, on 12 June 2022.
People are scared about the future and lack the confidence to spend.
While the Chancellor’s cost of living package and u-turn on the windfall tax are welcome, we need more than just sticking plasters. People want more than just sticking plasters. They want to know that the government has got control of the economy and a grip of this crisis.
Over the past 12 years the Conservatives have demolished the foundations of our economy.
With me as Chancellor, Labour will build a stronger, more secure economy. We will get the cost of living crisis under control and make Britain more resilient, laying the foundations we need for a thriving, dynamic economy.
The speech made by Rachel Reeves, the Shadow Chancellor of the Exchequer, in the House of Commons on 26 May 2022.
After today’s announcement, let there be no doubt about who is winning the battle of ideas in Britain—it is the Labour party. Today, it feels as though the Chancellor has finally realised the problems the country is facing. We first called for a windfall tax on oil and gas producers nearly five months ago, to help struggling families and pensioners. Today, he has announced that policy but he dare not say the words; it is a policy that dare not speak its name for this Chancellor. It was also Labour that first highlighted the unfairness of this Government’s buy now, pay later compulsory loan scheme. It should not have taken a rocket scientist to work out that this would not cut it, and we pointed that out at the time, but that is the mark of this Klarna Chancellor: announce now, ditch later. Here he is, once again, the Treasury’s one-man rebuttal unit, the Chancellor himself.
For months, it has been clear that more was necessary to help people bring their bills down, so what took this Government so long? Every day that they have refused to act, we have had £53 million added to Britain’s household bills during this cost of living crisis. This Government’s dither and delay has cost our country dearly. Labour welcomes the fact that the Government are finally acting on our calls to introduce a windfall tax, and it is good to see the SNP U-turning today and saying that they, too, are in favour of a windfall tax on oil and gas profits—well done to the SNP.
It was a painful journey to get the Government to this point. First, Conservative Ministers said that oil and gas producers were “struggling”—that was the Education Secretary, I think—but then the BP chief executive said that the energy crisis was a “cash machine” for his business, so the Government moved to the second defence. Ministers claimed that a windfall tax would put off vital investments, but the industry said that it would not even change its plans. Then the Government said that a windfall tax would be “un-Conservative”. It is so un-Conservative that Margaret Thatcher, George Osborne and now this Government are doing exactly that. Finally, the Chancellor said that it would be “silly” to offer help now, given that he did not know the full scale of the challenge. What nonsense! It should not take half a million pounds of publicly funded focus groups for the Chancellor to realise that helping families and pensioners is exactly the right thing to do.
Every day for five months, the Prime Minister sent Conservative MPs out to attack the windfall tax and yet defend an increase in taxes on working people. He has made them vote against the windfall tax not once, not twice, but three times. For months, he has sent his MPs to defend the litany of rule-breaking in No. 10 Downing Street that was set out in the Sue Gray report yesterday. There is a lesson here for Conservative MPs: you cannot believe a word this Prime Minister says, and as long as he is in office, he will continue making fools out of each and every one of you. If they keep him there, that is their choice. The problem is that you cannot fake fairness—you either believe in it or you don’t.
Labour called for a windfall tax because it is the right thing to do. The Conservatives are bringing it in because they needed a new headline. We see that, too, from all the other things that the Chancellor did not address today: the non-doms keeping their tax privileges while the Government increase taxes on working people; young working people paying more, but those who earn money buying and selling stocks and shares not paying a penny more; contracts handed out to Conservative friends and donors while British businesses miss out; global tech giants making billions in profits while smaller businesses and the energy-intensive industries struggle with higher bills and higher taxes from the Conservative party; and £11.8 billion lost in fraud because of a total lack of respect for taxpayers’ money. That is why we should have had an emergency Budget today that spikes the hike in national insurance, cuts business rates for high-street and small businesses, provides help for energy-intensive firms and ensures that every pound of taxpayers’ money is spent wisely.
We will look closely at the detail of today’s announcements. Of course, most of them seem to be written by us, but so far we have seen nothing to suggest that this Conservative Government have the ideas or the energy to tackle the challenges we face as a country. A Labour Government would have addressed the underlying weaknesses in our economy, so that we can stop this spiral of inflation, lift wages and provide greater security for families and for our country. The truth is that the Conservatives are running our economy, and people’s living standards, into the ground. We are forecast to have the slowest growth and the highest inflation in the G7. This Government have weakened the foundations of our economy, leaving us exposed to shocks as we lurch from crisis to crisis, and still they refuse to come forward with a real plan to fix our broken system and provide the security we need to face the future with confidence. That means boosting our energy security too. We need to do much more to reduce our reliance on imported oil and gas. That is why Labour’s energy security plan includes a programme of home insulation, to reduce bills not just for one year, but for years to come and to get us all the way to net zero. It is why we have urged the Government to double onshore wind capacity and to end the delay on nuclear power. [Interruption.] And while we are at it, why did this Tory Government get rid of our gas storage—[Interruption.]
Madam Deputy Speaker
Order. It is important that we also hear the shadow Chancellor.
Rachel Reeves
While we are at it, why did this Tory Government get rid of our gas storage, which would have left us better protected from wild fluctuations in prices? When will this Government provide the strong leadership that this country needs?
There are a number of questions for the Chancellor about his announcement today. How many people are still waiting for the support they were promised in March? A third of his constituents are still waiting for their council tax discounts. Are households still being asked to pay the supplier of last resort costs for those energy suppliers that have gone bust as a result of a decade of failed energy market regulation? How is this package being funded, outside of the proceeds of a windfall tax? If someone has more than one home, do they get multiple discounts on their energy bills? I know that the Chancellor has adopted two of our ideas today, but may I ask why he has not adopted a third: a cut in VAT on energy bills? It was once touted as the big Brexit bonus, but he has ditched that too. This is a discredited, chaotic and rudderless Conservative Government, whose policies rarely last more than a few months. We pushed for a windfall tax and they adopted it. We said the buy now, pay later scheme was wrong and now they have ditched it. This Government are out of ideas, out of touch and out of time. When it comes to the big issues facing this country, the position is now clear: we lead, they follow. [Hon. Members: “More!”]
The speech made by Rachel Reeves, the Shadow Chancellor of the Exchequer, in the House of Commons on 18 May 2022.
I beg to move amendment (w), at the end of the Question to add:
“but respectfully regret that the Gracious Speech fails to bring forward immediately an emergency budget to tackle the cost of living crisis or to set out a new approach to the economy that will end 12 years of slow growth and high taxation under successive Conservative Governments.”
We meet today when inflation has hit its highest level for 40 years. Every pound that people had last year can purchase only 91p-worth of goods today; that is what inflation of 9% means. Our country has a cost of living crisis and a growth crisis, with prices rising, growth downgraded and no plan for the future. None of this, though, is inevitable. It is a consequence of Conservative decisions and the direction they have taken our economy in over the past 12 years.
The Government are increasingly a rudderless ship, heading to the rocks, while they are willing to watch people financially drown in the process. Where is the urgency and the action? The time to change course is now. We need an emergency Budget to deal with the inadequacy of the Chancellor’s spring statement, with a windfall tax to help to get bills down and to help families and pensioners to weather the storm. On the day that inflation has reached a 40-year high, the Chancellor is missing in action. As energy bills and anxiety levels soar, the response from the Government diminishes in comparison.
Harriett Baldwin (West Worcestershire) (Con)
The hon. Lady asks where the action is. Will she accept that today £150 is going into the bank accounts of people in council tax bands A to D from councils across this country?
Rachel Reeves
The action that Labour proposes is a windfall tax to take up to £600 off people’s bills. As the hon. Lady knows, energy bills have gone up 54%, by an average of £693. With all respect, £150 just does not cut it.
Labour first proposed a windfall tax on 9 January, more than four months ago, and what was the first response from a Conservative Minister? It was to insist that a windfall tax would be unfair because Shell and BP were “struggling”. North sea oil and gas producers are making £32 million a day in unexpected profits. Meanwhile, parents trying to pay their bills are going without food so that their children do not miss meals—that is struggling. We now know that each and every day the Conservatives delay introducing a windfall tax, families and pensioners are forking out £53 million more in their energy bills.
Jim Shannon (Strangford) (DUP)
Last night, my party supported the amendment relating to oil and gas that was moved by the right hon. Member for Doncaster North (Edward Miliband). The hon. Lady is right: there is a real need to protect our pensioners. This morning, a constituent told me that his brother, a pensioner, sleeps in a sleeping bag to keep warm; another pensioner tells me that she can turn the heating on in her house for only one hour a day. One way of helping our pensioners would be through the proposal that the hon. Lady refers to: a windfall tax on those who are making exorbitant profits.
Rachel Reeves
I thank the hon. Member for speaking so powerfully about his constituents. After years of work and contribution to this country, a pensioner is sleeping in a sleeping bag to keep warm.
The Government got rid of the triple lock, and now they are refusing to implement a windfall tax. Every day, the case for Labour’s windfall tax gets stronger, while the Tory defence for refusing to act gets weaker and weaker, yet last night every single Conservative MP voted against a windfall tax for the third time. People can no longer afford to pay for the Government’s mistakes. The Government should put the national interest first and follow Labour’s advice. It is time to do the right thing; it is time to put the needs of people first; it is time to introduce a windfall tax to get bills down.
Chris Grayling (Epsom and Ewell) (Con)
Will the hon. Lady clarify one thing? There is a bit of dispute about how much a windfall tax would raise per household. There are about 25 million households in the UK. Will the hon. Lady confirm how much money per household a windfall tax would actually raise?
Rachel Reeves
A windfall tax would raise about £3 billion. That, combined with the extra VAT that the Government are receiving because prices have gone up so much, could go directly towards taking money off people’s bills. It would make a real impact now. Every single day, the energy companies are making £32 million in unexpected profits. This Government increase taxes on working people; a Labour Government would increase taxes on the big oil and gas companies.
The cost of living crisis is being made worse by a wage crisis, as years of Conservative Governments have failed to stand up for working people. At the Conservative party conference last year, the Prime Minister bragged of plans for a high-wage economy. How is that going? Let me update the House. In the six months since then, average real-terms pay has not risen, but fallen. Behind the headline figures, data released yesterday by the Institute for Fiscal Studies shows not only that workers are experiencing a fall in their real pay, but that the gap between those earning most and those earning least is widening. For the hospital porters, the supermarket assistants, the delivery drivers—the very people who worked tirelessly through the pandemic to keep this country going—wages are in no way keeping up with the rising cost of living.
Anthony Browne (South Cambridgeshire) (Con)
I just want clarification of the figures, because they are very important. The hon. Lady said that a windfall tax would raise £3 billion; among 25 million households, that is just over £100 each, which is less than the Government are giving. She then said that there would be £600 for each household, but that would cost about £18 billion, which is £15 billion more than the windfall tax would raise. Where would that extra £15 billion come from? Would it come from an increase in Government borrowing?
Rachel Reeves
Our scheme is very clear. We would introduce a windfall tax, use that money to reduce VAT on gas and electricity bills from 5% to zero, and expand the warm home discount from the measly £140 that people get today to £400. We would fund that through the windfall tax, through the additional VAT receipts that the Government are getting in at the moment because prices are so high, and through receipts from the additional corporation tax that the oil and gas companies are paying. The Government will end up doing this. The only question is when they will get on and deliver for their constituents. Oil and gas companies are making record profits and people are paying record bills. It is a question of whose side you are on. The Government are very clear that they are on the side of the oil and gas companies; the Opposition are very clear that we are on the side of ordinary families and pensioners.
The Government have failed to introduce not only the windfall tax, but the employment Bill that has been repeatedly promised. There is a real-world price: allowing scandalous threats of fire and rehire to continue to drive down conditions at work, not just in the appalling P&O case, but in other sectors. Fire and rehire should have been outlawed, but thanks to this Government’s actions it is being encouraged. Employment rights for the modern world of work will not just protect workers, but boost growth and financial security. That makes for a stronger economy with firm foundations, rather than allowing a race to the bottom that takes away dignity as well as eroding family finances.
Kevin Hollinrake (Thirsk and Malton) (Con) rose—
Ellie Reeves (Lewisham West and Penge) (Lab) rose—
Rachel Reeves
I give way to my hon. Friend the Member for Lewisham West and Penge (Ellie Reeves).
Ellie Reeves
As well as struggling with rising fuel bills and food prices, many of my constituents are worried about their precarious work, about not knowing from one week to the next what hours they will get, and about being fired by unscrupulous employers. Does my hon. Friend agree that the Queen’s Speech was a missed opportunity to introduce the long-awaited employment Bill, which would ensure that workers get the dignity and security that they desperately need?
Rachel Reeves
The sad truth is that the Government used to agree. Introducing an employment Bill was in their manifesto; in fact, they have been promising it for five or six years. Let us have that employment Bill to protect people at work, so that working people do not have to resort to food banks, and so that they have the security and dignity that work should provide.
April’s International Monetary Fund data show that families in Britain are more exposed to the cost of living crisis than countries such as Germany, France and the US because of depleted savings. Savings are declining and household debt is on the rise, not because millions of people can no longer manage a budget, but because millions of people cannot afford a Conservative Government. Working families are increasingly struggling with their budgets because the Chancellor has failed to act in his Budgets. The Food Foundation believes that since January, 2 million people have not eaten food for at least a whole day, because they could not afford to.
Geraint Davies (Swansea West) (Lab/Co-op) rose—
Kevin Hollinrake rose—
Rachel Reeves
I give way to my hon. Friend the Member for Swansea West (Geraint Davies).
Geraint Davies
My hon. Friend knows that food banks were used by something like 26,000 people in 2010 and are now used by 2.6 million people—100 times as many. Does she agree that the economy’s growth now contrasts dismally with its 40% growth in the 10 years to 2008 under Labour? The Institute for Fiscal Studies has said that if we were on the same growth trend, the average person would be £11,000 better off and could therefore weather the storms that we are suffering because of the Tory Government.
Rachel Reeves
My hon. Friend is absolutely right. That is the Tory growth penalty—the effect of the lack of growth in the economy. Average earnings are £11,000 less than if growth had stayed at the same rate as under the last Labour Government.
My hon. Friend mentioned a hundredfold increase in food bank use. This is not normal; it is the consequence of Conservative Governments’ choices. Meanwhile, what have we heard in recent weeks? We have heard suggestions from Ministers about what people can do in their own lives to deal with the cost of living crisis. The Prime Minister thinks that a 77-year-old pensioner who rides on the bus all day to keep warm should be grateful for her discounted fares; the Environment Secretary has lectured people struggling with the cost of food, telling them to “buy own brands”; and the Secretary of State for Levelling Up, Housing and Communities has treated the need for an emergency Budget as if it were an audition for a comedy club. Another out-of-touch Minister has told people, just this week, that if they are struggling financially they should simply work more hours or get another job—as if it were as easy as that. The Chancellor continues to insult the public’s intelligence by suggesting that a compulsory £200 loan—a loan that must be repaid—is somehow not a loan, and now blames a computer system for his decision not to help the least well-off. What planet are they on?
Nadia Whittome (Nottingham East) (Lab)
Does my hon. Friend agree that given that wages have been falling for the last 14 years and inflation is now at 9%, or 11% for the poorest families, there is an alternative to people’s wages being squeezed—that the Government could squeeze profits instead? Shell and BP raked in more than £12 billion in the first three months of this year alone, and it is shameful that every Conservative Member voted against a windfall tax yesterday when they had the chance to support it.
Rachel Reeves
Conservative Members voted against the windfall tax not for the first time, not for the second time, but for the third time. Every single Conservative MP opposed what they know is the right thing to do. A Labour Government would tackle the cost of living crisis head-on. We would introduce a windfall tax on oil and gas producer profits to cut household bills by up to £600, a home insulation policy that would save millions of households up to £400 a year, and a discount on business rates for high street firms funded by a tax on the online giants. Perhaps the Chief Secretary can tell us in his speech why the Government will not abolish the unfair, outdated and unjustifiable non-dom tax status, and use that money to keep taxes on working people down.
Finally, Labour would put a stop to the Chancellor’s fraud failures, which allowed £11.8 billion of taxpayer funds to go criminal gangs, drug dealers and worse. We would claw back every penny of taxpayers’ money that we could, because the public are sick of being ripped off and they want their money back.
We are now in the worst of all possible worlds, with inflation high and rising, and growth low and falling—in other words, there is stagflation. This Conservative Government must address the underlying weaknesses in our economy, which are the result of years of Tory failure. Growth has stagnated, not just this year but over the last 12 years, falling from 2% on average under the last Labour Government to just 1.5% a year in the decade leading up to the pandemic.
The Conservatives have failed to work with British industries—employers and trade unions—to create the economic growth that would benefit everyone, and for 12 years that approach has sown chaos and uncertainty, making it impossible for businesses to invest with confidence. Now the UK economy has the worst growth projections of any G20 economy but one: Russia.
Kevin Hollinrake
Will the hon. Lady give way?
Rachel Reeves
The Bank of England has issued a stark warning of a downturn next year, with GDP projected to fall, and it is not set to get much better after that. [Interruption.] The Chief Secretary says, from a sedentary position, that it is set to get better. Oh, yes—growth in the following year is expected to be 0.25%, almost 10 times lower than what the Office for Budget Responsibility predicted in March. Well, done, Tory Government!
We have heard nothing from this Conservative Government about what they will do to change the situation, and if the Chief Secretary is proud of that record, good luck to him. The Government have no plan to provide the catalytic investment that we need to create new markets, no plan to get trade moving again and tackle the supply chain problems facing businesses, and no plan for a new industrial strategy to make the most of Britain’s potential, bringing good jobs to all parts of Britain. The Conservatives have become the low-growth party, and our country is paying the price.
Matt Western (Warwick and Leamington) (Lab)
My hon. Friend is making some powerful points about the fall in growth. I am sure she will be as concerned as I am about the statistics which show the decline in business investment, which I think is down by 9%. We are seeing a 34% fall in automotive production, which is a massive hit for the UK economy. The impact on our foreign competitors is less, because those countries have a strategy. Does my hon. Friend agree that this Government seem not to have an industrial strategy—for gaming semiconductor production, for example? Does she agree that that is what is needed, and that is what a Labour Government would do?
Rachel Reeves
The figures from the International Monetary Fund show that investment as a proportion of our economy in the UK is 18%, if we take both public and private investment into account. In other similar economies that the IMF looks at, it is 23%. If we add that up over the next six years—the IMF’s forecast horizon—we see a projection of £1 trillion less investment in the UK than in other countries. These are huge missed opportunities to create the jobs and industries of the future that my hon. Friend wants to see in Warwick and Leamington and all of us want to see in our constituencies.
The Government’s lack of action is felt by businesses. In April, the price of materials for UK manufacturers increased at its fastest rate since records began, with prices up by nearly a fifth on the previous year. When I speak to businesses, they are worried about falling consumer confidence and a lack of spending power, as well as the costs that they are having to face.
Kevin Hollinrake
Will the hon. Lady give way?
Rachel Reeves
The British Retail Consortium has explained that the rising cost of living has crushed consumer confidence and put the brakes on consumer spending. So many businesses that worked tirelessly to adapt and survive the pandemic were banking on this year to recover, and it is just not happening.
Kevin Hollinrake
Will the hon. Lady give way, on that point?
Rachel Reeves
We could be so much better. Our geography, our universities and our industrial heritage offer so much potential, but the Government do not do enough to unlock it. I have seen the brilliant businesses and emerging industries that will power our economy and lead the world: businesses such as Nanopore, a technology and life sciences firm that started as a research team at Oxford University and now employs more than 600 people; Rolls-Royce in Derby—I was there a couple of weeks ago—which is leading pioneering research with world-leading engineers developing carbon-neutral technologies; and Castleton Mills in my own city of Leeds, once a key part of West Yorkshire’s textiles industry but now a creative, collaborative space housing freelancers, remote workers and start-up businesses.
Kevin Hollinrake
Will the hon. Lady give way?
Rachel Reeves
However, the success that I see all around the country could be strengthened with strong leadership and vision from the Government. Ministers are more concerned about the next headline or photoshoot than about creating credible plans for growth and success. Today, as inflation spirals out of control, where is the £3.4 million PR budget in the Treasury, and what is the Treasury doing?
Kevin Hollinrake
Will the hon. Lady give way?
Rachel Reeves
I will give way to the hon. Gentleman. [Hon. Members: “Hurray!”]
Kevin Hollinrake
I will sit here again next time.
The hon. Lady mentioned earlier the support for households in the form of the £200 discount on their energy bills. That went to 100% of households. The £150 council tax deduction reached 80% of households. Will the hon. Lady tell us what percentage of households would receive the £600 per household to which she referred?
Rachel Reeves
It is great to see Conservative Members taking so much interest in this. It suggests to me that a policy from them on the windfall tax is coming soon, and it will be welcome.
We have said that the £600 would go to a third of households. We would increase the warm home discount from £140 to £400, and that would go to a third of households. The hon. Member is, like me, an MP in Yorkshire. Across Yorkshire, every day, an extra £4.5 million is spent on energy costs as a result of the Conservative party’s failure. A total of £220 million has been spent in the seven weeks since the energy price cap went up. Constituents in Thirsk and Malton, like my constituents in Leeds West, are looking for answers, and an expansion of the warm home discount, paid for by a windfall tax, would make a massive difference throughout our region in Yorkshire.
We need an ambitious plan for the future. That is why Labour will scrap business rates, and the system that replaces them will incentivise investment, promote entrepreneurship and bring life back to our high streets. The race is on for the next generation of jobs, and Labour will make the investment we need with a growth plan to bring opportunities to the whole country, working in partnership with great British industries to get us to net zero and revitalise coastal communities and former industrialised towns. We do not want to be importing all the technologies and products we need; if we can make it here in Britain, we should do so. That is why a Labour Government will buy, make and sell more here at home.
We will make Brexit work, with a bespoke EU-UK veterinary agreement to cut red tape for the food and agriculture industries and mutual recognition of professional qualifications to help our fantastic business services industries and to make it easier for our creative industries to tour and perform. Unlike the Conservatives, Labour will ensure that our economy grows and prosperity is shared.
Martin Docherty-Hughes (West Dunbartonshire) (SNP)
On the matter of making Brexit work, there is a concern that the United Kingdom now mirrors the United States with its labour shortages, rather than mirroring the right to work across the European Union. This is having a drastic effect on the whole of the United Kingdom of Great Britain and Northern Ireland. Can the hon. Member say a wee bit more about how they want to emulate Europe’s labour market situation rather than that of the United States with its labour shortages?
Rachel Reeves
The best way to fill those gaps in the labour market is to be training people here in Britain. We have seen the nurses shortage in the papers today. We are having to bring in nurses from all around the world because we are not training nurses here. There are job vacancies here in Britain, and we need to ensure that our young people get the opportunities to train for those high-paid and high-skilled jobs here in Britain. [Interruption.] The Minister says that no one disputes that, so why are the Government not doing it?
The Tories are out of touch and they are out of ideas. They are the party of high taxes because they are the party of low growth. Their choices have made the cost of living crisis much worse than it needed to be. Their decisions have left those with the least fearing for the future. The Tories cannot be trusted with public money. They have handed billions to their friends, to their donors and to fraudsters. We need an emergency Budget with a windfall tax to keep energy bills down. We need a Government that take growth seriously. We need a new vision for a fairer and more prosperous economy. Labour has a different economic approach: pro-worker and pro-business, with a plan to unleash the potential of both. A Labour Government would steer our country through these difficult times together. I urge Members across the House to do the right thing today and vote for an emergency Budget to get our country and our economy back on track.