08 July 2024

Reeves: ‘No time to waste’ in drive for greater economic growth

08 July 2024

Chancellor Rachel Reeves will make kickstarting economic growth a “national mission” with major changes to speed up infrastructure projects and unlock private investment.

In her first major speech, Ms Reeves will vow to take “difficult decisions” because there is “no time to waste” with boosting growth.

Labour will “fix the foundations” of the British economy, she will say, arguing that 14 years of Tory rule had cost £140 billion in lost growth.

Sir Keir Starmer’s administration has made faster economic growth, and the tax revenues that would flow from it, a key plank of its strategy to fund public services which are struggling for cash.

The Labour manifesto committed to wholesale planning reforms to make it easier to build and a greater focus on driving through key infrastructure projects which have become mired in delays and boost housebuilding.

The manifesto pledged to “immediately” update the National Policy Planning Framework to undo changes made by the Conservatives, including restoring mandatory housing targets.

The party also plans to allow building on some greenbelt land, promising to take a “more strategic approach” to “build more homes in the right places”.

Speaking in London, Ms Reeves will tell business chiefs: “Where governments have been unwilling to take the difficult decisions to deliver growth – or have waited too long to act – I will deliver.

“It is now a national mission. There is no time to waste.”

We face the legacy of 14 years of chaos and economic irresponsibility

She will set out the steps the Government has taken to “fix the foundations of our economy, so we can rebuild Britain and make every part of our country better off”.

With forecasts for the public finances indicating a squeeze of up to £20 billion in spending on departments where budgets are not protected, Labour will rely on increased growth to keep its twin promises of not returning to austerity and avoiding tax hikes beyond the measures it has already announced.

The Chancellor will say that failing to keep pace with the average level of growth in the OECD group of developed countries has cost the Exchequer £58 billion in tax revenue.

Ms Reeves will say: “We face the legacy of 14 years of chaos and economic irresponsibility.

“New Treasury analysis I requested over the weekend exposed the opportunities lost from this failure.

“Had the UK economy grown at the average rate of OECD economies since 2010, it would have been over £140 billion larger.

“This could have brought in an additional £58 billion in tax revenues last year alone to sustain our public services.

“It falls to this new Government to fix the foundations.”

The Treasury indicated Ms Reeves would announce swift changes to unblock infrastructure and private investment.

Ms Reeves has previously branded the planning system “the greatest single obstacle” to economic success.

Labour’s manifesto committed to a 10-year infrastructure strategy to guide investment plans and give the private sector certainty about the project pipeline and the creation of a National Infrastructure and Service Transformation Authority to oversee schemes.

The manifesto also promised to update planning policy to make it easier to build laboratories, digital infrastructure and gigafactories as well as 1.5 million homes.

The Institute for Government think tank called on Ms Reeves to commit to a series of changes, including a multi-year spending review and a wider mandate for the Office for Budget Responsibility.

IfG deputy economist Tom Pope said: “Rachel Reeves has the opportunity to set her stall out early and secure a lasting legacy by reforming how fiscal policy is made.

“She has already made welcome commitments to strengthening the role of the OBR and holding only one major fiscal event each year.

Chancellor of the Exchequer, Rachel Reeves leaves No 11 Downing Street after being appointed the first female chancellor (Stefan Rousseau/PA) (PA Wire)

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