Labour pledges ‘fiscal lock’ to protect UK economy, says Rachel Reeves
A Labour government would deliver a “new fiscal lock” to legally guarantee significant tax and spending changes must be reviewed by economic experts, Rachel Reeves has vowed.
The shadow chancellor said a government led by Sir Keir Starmer would “put forward a new charter for budget responsibility” in the wake of the chaos wrought by Liz Truss’ mini-budget.
Reeves said the measure would “guarantee in law that any government making permanent and significant tax and spending changes will be subject to an independent forecast from the Office for Budget Responsibility [OBR]”.
Making her keynote speech at the Labour Party conference in Liverpool, the former Bank of England (BoE) economist was endorsed in a video message by former Bank of England governor Mark Carney.
Carney told delegates: “Rachel Reeves is a serious economist. She began her career at the Bank of England, so she understands the big picture.
“Crucially she understands the economics of work, of place and family. And, look, it is beyond time we put her energy and ideas into action.”
Reeves told the packed hall: “A Labour government will not waver from iron-clad fiscal rules, nor play the Tory game of undermining our economic institutions.
“We will protect the independence of the BoE, the OBR and our civil service.”
Reeves also outlined how a Labour government would crack down on the misuse of public money, pledging: “Labour will wage a war against fraud, waste and inefficiency”.
She said the party would clamp down on “Tory ministers’ private jet habit” by enforcing the ministerial code; and “slash” government consultancy spending by introducing tough new rules on value for money in a bid to halve the cost over the next Parliament.
She also promised to tackle the “carnival” of pandemic waste and fraud, estimated at £7.2bn, by appointing a Covid corruption commissioner and a “hit squad of investigators… [to] claw back every penny they can”.
Following the scrapping of the northern leg of HS2, Darren Jones, shadow chief treasury secretary, will review how a Labour government can deliver major infrastructure, Reeves announced.
“A major transport project lost, another promise broken because the government could not keep costs under control,” she said.
“I will not tolerate taxpayers’ money being treated with the disrespect we have seen over recent years… I will hold those responsible to account.”
In remarks briefed overnight, Reeves pledged to “get Britain building again”, vowing to tear up the red tape of the “antiquated” planning system and turbocharge critical infrastructure schemes by updating national planning policy statements within the first six months in office.
She also said the party would increase business investment as a share of GDP from 10 per cent to 11 per cent — or £50bn more a year in the economy by 2030.
Unison general secretary Christina McAnea said that Reeves had a “compelling vision” which would “attract investment, create growth and rebuild crumbling public services”.
Melanie Leech, chief executive of the British Property Federation, said planning reform was “high on the agenda” and could boost the UK economy by “more than £11bn a year”.
Chancellor Jeremy Hunt, however, criticised Reeves for her “extraordinary failure” to mention the word inflation, which he said was the “biggest challenge facing the British economy”.
And he called Labour’s plans to borrow £28bn a year to invest “a fairy tale with no happy ending” and the “worst kind of short-termism”.
Labour Party leader Sir Keir Starmer will make his speech tomorrow.