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Rachel Reeves Announces "Iron-Clad" Labour Economic Package Underpinned By Accountability

Rachel Reeves gave her speech to a crowded conference hall on Monday (Alamy)

4 min read

Shadow Chancellor Rachel Reeves has announced a package of measures that Labour would introduce to ensure future governments do not act irresponsibly with public finances.

In her landmark speech at Labour Party conference on Monday, Reeves set out how a Labour government “will not waver from iron-clad fiscal rules,” in an attempt to demonstrate the party’s fiscal responsibility ahead of the next general election, which is due to be called before the end of 2024.

“We will protect the independence of the Bank of England, the Office for Budget Responsibility (OBR), and our civil service,” she said.

“As chancellor I will put forward a new charter for budget responsibility, a new fiscal lock guaranteeing in law that any government making permanent and significant tax and spending changes will be subject to an independent forecast from the OBR.”

Reeves’ announcement follows last year’s disastrous mini-budget announced by then-prime minister Liz Truss and chancellor Kwasi Kwarteng that crashed the markets and had been implemented without an OBR forecast. 

“Never again will we allow a repeat of the devastation that Liz Truss and the Tory party have inflicted on family finances,” Reeves said.

“Liz Truss might be out of Downing Street but she is still leading the Conservative Party.

“Out of the wreckage of Tory misrule, Labour will restore our economic credibility, we will lift our living standards, make work pay, rebuild our public services, invest in homegrown industries in every corner of our country, and together we will get Britain its future back.”

The shadow chancellor gave her speech to a packed conference hall, with many turned away at the door due to the hall being filled over capacity – much to the disappointment of some delegates who had paid for VIP seats.

After the speech, a Labour spokesperson joked to reporters that “it’s a sign of a changed Labour Party when you get a round of applause for the Office of Budget Responsibility".

Describing conference as a “momentous week”, the shadow chancellor stressed that Labour must get into government to “put our principles into action” as for the last 13 years they have had the “power to talk but not the power to do”.

Reeves also said that there needed to be a “new business model for Britain” and a “new age of security” that ensured the UK was not reliant on a few countries for resources. 

“Globalism as we once knew it is dead,” she said.

“Disruption to supply chains that span the globe has revealed the perils of prizing only the fastest and the cheapest, and our ability to make the things essential to our security has been depleted.

“It is no longer enough for the government to turn a blind eye to where things are made or who is making them, to run an economy based on the contributions of only a few people.

“A changed world demands a new business model for Britain.”

Describing her approach as “securinomics”, Reeves said the UK “must do more” to make things in Britain so we are “less exposed to global shocks” and called for an economy “rebuilt in the interests of working people”.

In her speech, Reeves also announced that Labour would introduce a “Covid corruption commissioner" with a "mandate to do what it takes" to recover taxpayer money lost to Covid fraud. 

Reeves reiterated Labour’s policy to end the tax loophole that exempts private schools from paying VAT and business rates, and said the party would “put that money into helping the 93% of our children who are in state schools” if they get into government.

At the end of the speech, a short video was played of Mark Carney, the former Governor of the Bank of England, endorsing Reeves as a possible future chancellor. 

“Rachel Reeves is a serious economist," he said.

“She began her career at the Bank of England, so she understands the big picture, but, 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.”

A Labour spokesperson said Reeves was "very proud" that Carney had spoken in support.

Dr George Dibb, associate director for Economic Policy at the IPPR think tank that the speech showed a “logical development” from previous policy announcements and long-term plans, but it “also recognised that [...] if you’re campaigning, that doesn’ necessarily set people’s hearts alive with excitement.” 

He explained he thought that the longer-term plans were balanced with shorter term policies such as proposals on the minimum wage.

“You can talk to people and say how your life would be different from day one. 

“Balancing that short and long term stuff in the speech is really interesting,” he added.

 

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