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British Finance Minister Rachel Reeves will on Monday hit back at claims she is sapping the economy, telling the Labour party conference there will be “no return to austerity” and insist her Budget contains “real ambition”.
Mr Reeves and Chancellor Sir Keir Starmer have been accused of creating an atmosphere of economic gloom by warning of a dire state of the finances and a “painful” budget next month as consumer confidence plummeted in September.
Last week Andy Haldane, a former chief economist at the Bank of England, said the government was creating “fear and foreboding”, and a senior official at one major bank said they were “struggling to get out of the recessionary hole they got themselves into”.
With more than 500 business people paying £3,000 each to attend the conference’s “business day” in Liverpool on Monday, Mr Reeves will try to paint a picture of a brighter future for Britain in his address to party delegates.
“My optimism for Britain is burning brighter than ever,” she will say. “If we make the right choices now, the gains are clear – and stability is the fundamental foundation on which all our ambitions are built.”
Reeves warned about the tax hikes in his Oct. 30 budget, saying “planning for growth without stability will only lead to disaster.”
But she will tell Labour members that there will be “no return to austerity. Conservative austerity was a destructive choice for our public services and for investment and growth”.
Her more upbeat comments are intended to boost morale at a Labour conference overshadowed by infighting within Downing Street, a row over “freebies” for Starmer and other ministers, and criticism of the government’s decision to cut winter fuel payments for 10 million pensioners.
On Monday, Mr Reeves and Mr Starmer will try to reassure Britain’s bosses that they remain firmly on their side, despite business concerns about their gloomy stance on finances, new workers’ rights and possible tax hikes.
Tickets for the conference’s business day sold out within 24 hours, despite ticket prices having risen sharply from around £2,100 for the same event when the party was in opposition last year.
Mr Starmer, Mr Reeves and Business Secretary Jonathan Reynolds, who reached out to business leaders before the election, are being viewed with increasing scepticism by some business leaders.
Labour’s strategy so far appears to have been “to prioritise growth whilst at the same time undermining all the levers of growth”, the chairman of one of the FTSE’s 10 most valuable companies told the Financial Times.
Budget decisions affecting business tax are still pending, while criticism has also been levelled at the decision to hold a Global Investment Summit on October 14 to promote the UK as an investment destination. A new Investment Minister has yet to be appointed.
Party leaders hope Labour can bring political and economic stability after a period of instability under the Conservative government, with frequent changes in prime minister, but some are increasingly concerned about the lack of positive action from the government since the July 4 general election.
Labour said the Business Day event, sponsored by companies including HSBC, Mastercard and Intuit, was double the size of last year’s, with more than 100 CEOs and chairpersons in attendance, including representatives from Blackstone, Santander UK, Uber and Shell.
But one senior lobbyist said ticket prices for Business Day had risen so much that it was no longer worth attending, while another joked that his organisation had only bought one ticket and the chief executive would have to take his own notes.
In his speech on Monday, Reeves is expected to confirm plans for a new industrial strategy and highlight to international investors the areas with the most potential for growth.
She is expected to launch a debate on the policy when she publishes a green paper in time for the budget, but the Chancellor is likely to announce that a final policy will not be ready until next spring.
Speaking to the Financial Times ahead of the Labour conference, Reynolds said he wanted to appoint the chair of the new Industrial Strategy Council before the investment summit in October.
The Business Day event will be an opportunity for bosses to lobby Mr Starmer against excessive regulation of the labour market and budget tax increases for businesses beyond corporation tax, which Labour has said it will not increase.
Many are particularly concerned about the possible rise in capital gains tax and the elimination of tax concessions that allow owners of shares in private companies and AIM-listed companies to avoid tax.
