Labour leader Sir Keir Starmer will use his conference speech on Tuesday to tell British voters his party stands for “sound money” as he seeks to take the mantle of economic competence from the ruling Conservatives.
He will criticise chancellor Kwasi Kwarteng’s tax-cutting, high-borrowing mini-Budget announced last week, which rattled markets and sent sterling to historic lows on Monday. The plan set out a range of tax cuts, including abolishing the top tax band of 45 per cent that applies to earnings over £150,000.
“What we’ve seen from the government in the past few days has no precedent,” Starmer will say. “They’ve lost control of the British economy — and for what? For tax cuts for the richest 1 per cent in our society.”
Starmer will claim that Labour is “the party of the centre ground” and dub it “the political wing of the British people”, borrowing a phrase from former Labour leader Sir Tony Blair.
On Monday, Labour’s shadow chancellor Rachel Reeves promised that if in power the party would reinstate the top income tax band and spend the proceeds on increasing the number of doctors and nurses in the NHS.
She told delegates at the conference in Liverpool that a Labour government would use the £2bn raised from reimposing the top band to tackle the acute staffing crisis in the NHS.
The money would fund the training of more than 5,000 new health visitors, create another 10,000 nursing and midwife placements every year and double the number of medical students.
She accused new prime minister Liz Truss of abandoning the previous Tory government’s “levelling up” agenda, designed to rebalance the economy away from London and the south-east. Instead Truss was pursuing “trickle-down economics” under which taxes are tweaked to help wealthy people generate broader economic growth. “That idea has been tried, has been tested and has failed,” she said.
Reeves said that as chancellor she would maintain a tight grip on Britain’s public finances, in contrast to Kwarteng who last week announced more borrowing than at any Budget since 1972 at a time when inflation was already high and interest rates were rising.
The so-called mini-Budget rattled markets as investors sent sterling plunging and gilt yields spiking. “The message from financial markets was clear on Friday, and this morning that message is even more stark: sterling is down. That means higher prices as the costs of imports rise,” she said.
Reeves said a Labour government would ensure all of its policies were “carefully costed and fully funded”, as she accused the Conservatives of breaking their own fiscal rules 10 times in the 12 years they have been in power.
The shadow chancellor lambasted the Tories for the “more than £50bn piled on to the national debt every single year, because of their reckless decision to put all the costs on to borrowing”.
A Labour government would also reverse Kwarteng’s £17bn-a-year cut to corporation tax but would keep the chancellor’s other two big reductions: a £13bn cut to national insurance and in the basic rate of income tax by 1p next April to 19p, worth £5bn.
One of the biggest differences in economic policy between the government and the opposition at present is instead over the scale of measures to address the energy crisis.
The government said on Friday that its scheme to cap energy prices would cost £60bn for just six months. The bailout — made up of £31bn for households and £29bn for businesses — will largely be paid for through huge amounts of borrowing.
Labour’s energy rescue plan, announced in August, would have cost only £29bn over the same period because it would have been targeted only at households. The party said it would have been funded by extending the existing energy windfall tax, scrapping the government’s universal £400 payment this autumn and by lowering state debt repayments because the intervention would have cut inflation.
Labour would only have put up a £1bn support package for businesses aimed at energy-intensive industries and offered a further £1bn cut in business rates for small companies — paid for by a £2bn rise in the digital services tax.
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