Reeves promises ‘real ambition’ ahead of crunch UK budget

LONDON – Chancellor of the Exchequer Rachel Reeves promised to deliver a UK budget showing “real ambition” in October as she used her speech at the Labour Party’s annual conference to project a positive vision for the country.

“This budget will be a budget for economic growth; it will be a budget for investment,” she said on Sept 23 at the gathering in Liverpool. “My ambition knows no limits, because I can see the prize on offer if we make the right choices now.”

Ms Reeves – who was interrupted during her speech by a heckler – is seeking to project a more positive vision for Britain after spending most of her 11 weeks in office warning of the dire state of the public finances she inherited from the previous Tory administration.

To fill a £22 billion (S$37.7 billion) fiscal hole, the chancellor is widely expected to announce tax increases in her budget on Oct 30.

On the morning of Sept 23, she ruled out a wealth tax in a BBC radio interview. She also promised she would not squeeze public spending as the Tories did.

“There won’t be a return to austerity, there will be real-terms increases to government spending in this Parliament,” Ms Reeves told BBC Radio 4, though she added a caveat that the spending budgets for individual departments will be “negotiated” – suggesting some areas may lose out.

She also promised to set out plans for a new industrial strategy alongside Business Secretary Jonathan Reynolds in October, and to appoint a Covid-19 commissioner to investigate £674 million of pandemic-era contracts that are in dispute.

“That money belongs in our police, it belongs in our health service, and it belongs in our schools,” she said.

“We want that money back,” she said to loud applause – in a refrain that appeared to echo words from former Tory premier Margaret Thatcher in the early 1980s as she sought better financial terms with the then European Economic Community. 

“We are calling time on the ideas of the past; calling time on the days when government stood back, left crucial sectors to fend for themselves, and turned a blind eye to where things are made and who makes them,” Ms Reeves added. “The era of trickle-down, trickle-out economics is over.”

Britain’s major business groups broadly welcomed her speech. Mr Stephen Phipson, chief executive of manufacturing lobby group Make UK, said the promise of a new industrial strategy was a “vital piece in the jigsaw of future economic growth” and would “pull the levers of both domestic and international investment”.

Ms Rain Newton-Smith, CEO of the Confederation of British Industry, said Ms Reeves “hit the right notes” and had an “optimistic pitch to investors” about the strengths of the UK economy.

Ms Reeves’ speech was interrupted by pro-Palestine protesters. One activist stood up, unveiled a banner and shouted that Britain should stop arming Israel, before being bundled out by security guards. Ms Reeves retorted that “this is a changed Labour Party, a Labour Party that represents working people, not a party of protest”.

The chancellor is also trying to regain the initiative after a backlash against her decision to remove winter fuel payments from about 10 million pensioners, and as the wider Labour administration battles negative headlines over accepting freebies and in-fighting among Prime Minister Keir Starmer’s top team.

“We must have no complacency, a relentless focus on the priorities of the British people, an iron discipline,” Ms Reeves said. “I know that not everyone in this hall or the country will agree with every decision I make, but I will not duck those decisions.” BLOOMBERG