Labour to Fight UK Vote on Economy in Challenge to Tories

Labour will fight the next general election on the economy, shadow Chancellor of the Exchequer Rachel Reeves said, as the UK opposition party targets political ground typically claimed by the governing Conservatives.

(Bloomberg) — Labour will fight the next general election on the economy, shadow Chancellor of the Exchequer Rachel Reeves said, as the UK opposition party targets political ground typically claimed by the governing Conservatives.

In a standing-room only speech at her party’s annual conference in Liverpool on Monday, Reeves promised to boost business investment, ramp up housebuilding and ease planning rules in order to spur growth. Central to that is ending the backlog of investment into modernizing the UK’s electricity grid to enable the transition to a greener economy, she said.

“The single-biggest obstacle to building infrastructure, to investment and to growth in this country is the Conservative Party” Reeves said. “We will fight this election on the economy.”

Her comment tapped into a recent shift in polling showing falling trust in the Conservatives’ economic stewardship. Some 21% of adults surveyed by YouGov last month said the Tories would be better at handling the economy, down from 47% in March 2020. Some 26% say Labour would be better, almost doubling.

More broadly, Britons are struggling through an historic squeeze on living standards. Labour officials say they’re gearing up for an election as soon as May, in part because the earlier Prime Minister Rishi Sunak calls the vote, the fewer voters will have been forced to re-mortgage at higher interest rates.

Read more: Labour to Fight UK Election on Economy in Challenge to Tories

The shadow chancellor — who would become Britain’s first female finance minister if Labour wins power in an election widely expected next year — hit out at the 13-year record of Sunak’s party. She got multiple standing ovations, including when she promised to crack down on state spending on consultants, probe a “carnival of waste” during the Covid-19 pandemic and investigate why the HS2 high-speed rail project Sunak canceled last week went so over budget.

It had echoes of totemic Tory premier Margaret Thatcher’s phrase in the 1980s, “I want my money back.”

But Reeves’s ire was directed at the Conservatives and their legacy since 2010, including austerity and Brexit. “Is there anything in Britain that works better than when the Conservatives came into office thirteen years ago?” she said.

Following her speech, Labour ran a video showing former Bank of England Governor Mark Carney apparently endorsing Reeves. “She understands the big picture. But crucially she understands the economics of work, of place and family,” he said. “It is beyond time we put her energy and ideas into action.”

Carney was recently named chair of Bloomberg LP, the parent company of Bloomberg News.

Reeves also confirmed plans to raise taxes on non-domiciled foreign nationals, increase property levies on overseas buyers and scrap tax breaks for private schools. The party would also boost the UK’s compulsory minimum wage to ensure it was a “genuine living wage,” she said.

Read more: Keir Starmer Battles Dire State of UK in Bid to Emulate Blair

Reeves calls her plan “securonomics,” to rebuild industry in a way that generates jobs and makes Britain more self-sufficient. But she also warned that Labour would have to restrain policies to fit the state of the UK economy they inherit from the Tories.

“The exhaustion of Conservative ideas does not give us the freedom to push through programs detached from our present economic reality,” she said. “Labour will tax fairly and spend wisely.”

That may disappoint Labour activists who worry the party is being too timid. Reeves and leader Keir Starmer are trying to do show how they can reshape Britain’s economy and its ailing public services in a way that doesn’t alienate business while appealing to the broadest swathe of voters. Starmer said Sunday that raising growth will be the “central” mission of his government.

That “will not be easy, but we believe many of the key levers we want to pull we can do,” shadow Business and Trade Secretary Jonathan Reynolds told Bloomberg TV on Monday.

Reeves, a former Bank of England economist, said Labour would respect that institution’s independence, and also strengthen the remit of the Office for Budget Responsibility so that every major government decision on tax or spending would be subject to its scrutiny.

That was a way to link the current Labour crop to the last time the party was in power, from 1997 to 2010, when it made the central bank independent. 

It was also a reference to Tory ex-premier Liz Truss, whose mini budget last year was announced without an OBR forecast and triggered market turmoil. 

Labour will stick to its fiscal rules with “iron discipline,’ Reeves told Bloomberg TV later. “We will invest in the things that will boost our productivity, working in conjunction with business to unlock further private sector investment.”

Read more: Reeves Says Labour Will Borrow to Invest If It Wins UK Power

Earlier, Reeves said Labour would use government borrowing to invest in British industry if it wins power, a move that risks playing into the hands of typical Conservative attacks over fiscal discipline. Chancellor of the Exchequer Jeremy Hunt duly hit back, saying more borrowing would fuel inflation.

But Reeves’s speech made clear Labour is more confident about taking the Tories on over their economic record. 

“It is time to put security first and reject the risk of five more years of chaos and decline,” she said. “When we next meet, I intend to address this hall as Britain’s first female Chancellor of the Exchequer.”

–With assistance from Lizzy Burden and Ellen Milligan.

(Updates with Carney’s endorsement in ninth paragraph, Reeves comment in 19th.)

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