Rachel Reeves rules out austerity despite tough budget choices

CHANCELLOR Rachel Reeves stated on Monday that there would be no return to austerity or widespread cuts, and committed to long-term growth despite earlier warnings of a challenging budget aimed at addressing the country’s economic foundation.

In a shift from weeks of cautioning that conditions would worsen before improving, Reeves told the media before a keynote speech that she had never been more hopeful about Britain’s future, but acknowledged the need for significant efforts.

After Labour's landslide victory in July, Reeves indicated that taxes would likely increase in her first budget on 30 October due to a reported £22 billion shortfall in public finances.

She confirmed that millions of pensioners would no longer receive winter fuel payments, a decision the government described as necessary but regrettable, drawing criticism from trade unions and other Labour supporters.

Speaking at the Labour Party conference in Liverpool, Reeves was set to prioritise stability for businesses and families in her address.

“There will be no return to austerity. Conservative austerity was a destructive choice for our public services – and for investment and growth too,” Reeves said, according to excerpts from her speech.

“We must deal with the Tory legacy, and that means tough decisions. But we won’t let that dim our ambition for Britain.”

Reeves stated that the absence of austerity would mean growth in public spending under Labour.

“The commitment that I will make for this budget is that it will be about protecting living standards, fixing the National Health Service, and then crucially about rebuilding Britain, because we can’t keep cutting investment spending,” she told Times Radio.

Labour will put money back in the pockets of working people and deliver a decade of national renewal. pic.twitter.com/iXHbLxNXai

— The Labour Party (@UKLabour) September 23, 2024

Difficult Choices

Reeves and Keir Starmer have faced criticism for presenting a bleak outlook, which, along with controversy over donations, has overshadowed what could have been a celebration of Labour’s first election win in 14 years.

A recent survey indicated a drop in consumer confidence, which was attributed to this pessimistic economic perspective.

Reeves stated the government would attempt to recover funds by appointing a Covid corruption commissioner to investigate over £650 million worth of contracts awarded by the previous government during the pandemic.

Critics have accused the previous administration of awarding contracts to individuals with personal or business connections to those in power, including deals for unusable personal protective equipment.

“I have never been so optimistic about our country’s future. If we can get this right then there is no end to what we can achieve as a country,” Reeves told Sky News.

Reeves also reiterated Labour’s commitment not to increase income tax, National Insurance, VAT, and corporation tax as outlined in their manifesto.

She defended the decision to cut winter fuel payments for some pensioners, a move criticised following reports that Starmer, Reeves, and other senior ministers had received donations for campaign expenses.

Reeves explained that she had used donations for campaign preparation, such as clothing and research, but assured that in government, these costs would not be covered by donors.

(With inputs from agencies)