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| Reeves warns Labour figures against ‘peddling idea’ of ditching fiscal rules | Reeves warns Labour figures against ‘peddling idea’ of ditching fiscal rules |
| (30 minutes later) | |
| Chancellor tells party conference that higher borrowing to pay for public services risks serious damage to the economy | Chancellor tells party conference that higher borrowing to pay for public services risks serious damage to the economy |
| UK politics live – latest updates | UK politics live – latest updates |
| Rachel Reeves has warned Labour figures “peddling the idea” the government could abandon fiscal responsibility to free up more money for public spending were “dangerously wrong” and risked serious damage to the economy. | Rachel Reeves has warned Labour figures “peddling the idea” the government could abandon fiscal responsibility to free up more money for public spending were “dangerously wrong” and risked serious damage to the economy. |
| In her speech to Labour conference, and in what will be widely interpreted as a criticism of Andy Burnham, the Greater Manchester mayor, she urged the party to be “honest” about what calls to borrow more would actually mean. | In her speech to Labour conference, and in what will be widely interpreted as a criticism of Andy Burnham, the Greater Manchester mayor, she urged the party to be “honest” about what calls to borrow more would actually mean. |
| Reeves said the country would face “further tests” in the months ahead, adding that her choices at next month’s budget would be made “all the harder” by harsh global headwinds and long-term damage done to the economy by the Conservatives. | |
| But the chancellor also urged Labour to “have faith” that things would get better, despite the difficult economic backdrop. Taking on Nigel Farage’s Reform UK directly, she said she wanted to “silence the nagging voices of decline”. | |
| “There is further to go, but whatever tests confront us, have faith because our party and our country have overcome greater challenges than these. Have faith because the opportunity to serve is what we came into this for,” she said. | “There is further to go, but whatever tests confront us, have faith because our party and our country have overcome greater challenges than these. Have faith because the opportunity to serve is what we came into this for,” she said. |
| “Have faith, knowing that this Labour government will not rest, I will not rest, until our patriotic cause is realised in a Britain that prizes contribution, that unlocks opportunity, that silences the nagging voices of decline … This is a fight that we must win and it is a fight that we will win.” | “Have faith, knowing that this Labour government will not rest, I will not rest, until our patriotic cause is realised in a Britain that prizes contribution, that unlocks opportunity, that silences the nagging voices of decline … This is a fight that we must win and it is a fight that we will win.” |
| Reeves also had a tough message for some on the left of Labour who want her to relax her fiscal rules to pay for more public spending. Among them is Burnham, who had prompted anger within No 10 and among cabinet ministers over his comments dismissing the bond markets. | Reeves also had a tough message for some on the left of Labour who want her to relax her fiscal rules to pay for more public spending. Among them is Burnham, who had prompted anger within No 10 and among cabinet ministers over his comments dismissing the bond markets. |
| In an impassioned speech, Reeves said: “Even now with the global uncertainty that we have seen ripple through financial markets, there are still critics out there who all too readily forget the consequences of reckless economic choices. | In an impassioned speech, Reeves said: “Even now with the global uncertainty that we have seen ripple through financial markets, there are still critics out there who all too readily forget the consequences of reckless economic choices. |
| “Never forget that in two hours one Friday almost three years ago the Conservatives under Liz Truss sent mortgage costs spiralling, put pensions in peril and consigned their party not just to defeat but to utter irrelevance. | “Never forget that in two hours one Friday almost three years ago the Conservatives under Liz Truss sent mortgage costs spiralling, put pensions in peril and consigned their party not just to defeat but to utter irrelevance. |
| “That was a warning. And the British people will not forgive any party that forgets it. Let us reaffirm our commitment that we will never, ever do what they did to ordinary working people in this country. | |
| “But I do know that there are still people who peddle the idea that we can just abandon economic responsibility, cast off any constraints on public spending. They’re wrong. Dangerously so. And we need to be honest about what that choice would mean.” | “But I do know that there are still people who peddle the idea that we can just abandon economic responsibility, cast off any constraints on public spending. They’re wrong. Dangerously so. And we need to be honest about what that choice would mean.” |
| Asked later who Reeves had meant to warn in her speech about fiscal responsibility, a Treasury spokesperson said it was directed at “Reform, Liz Truss and others”. | |
| The chancellor told delegates that she would take “no risks” with the trust of the British people on the economy. “I will make my choices at that budget. They will be choices to take our country forward.” | |
| But there was no mention of what those tough choices might be, as she faces the prospect of having to find up to £30bn in tax rises or spending cuts if, as expected, the Office for Budget Responsibility (OBR) cuts its forecast for future productivity growth. | |
| In media interviews before her speech, Reeves confirmed that she no longer stands by a pledge last year not to raise taxes, saying “the world has changed” due to a mixture of conflicts, US tariffs and higher borrowing costs. She strongly hinted, however, that VAT was not due to rise. | In media interviews before her speech, Reeves confirmed that she no longer stands by a pledge last year not to raise taxes, saying “the world has changed” due to a mixture of conflicts, US tariffs and higher borrowing costs. She strongly hinted, however, that VAT was not due to rise. |
| The chancellor also signalled that she might be about to change the oversight structure for the Treasury by downgrading the requirement for the OBR to provide two fiscal forecasts a year. | |
| A Treasury spokesperson confirmed the government was looking at the International Monetary Fund’s recommendation of a change in approach, saying: “I don’t think anyone would doubt her commitment to fiscal responsibility and protecting that institution [the OBR]. The IMF recommended moving to one major event a year alongside a second one because it would bring more stability to the economy. Businesses and markets can plan better. There are those arguments.” | |
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| Reeves got several early standing ovations as she delivered a speech that was serious and passionate in tone. But as Reform soars ahead in the polls, she said she “fundamentally” rejects the position of the right that the economy is broken. | Reeves got several early standing ovations as she delivered a speech that was serious and passionate in tone. But as Reform soars ahead in the polls, she said she “fundamentally” rejects the position of the right that the economy is broken. |
| “The Conservatives and Reform they want you to believe that our economy is broken, that our best days lie behind us, the decline is inevitable. I fundamentally reject that. It’s not the country I see around me, not the future that I believe in. | “The Conservatives and Reform they want you to believe that our economy is broken, that our best days lie behind us, the decline is inevitable. I fundamentally reject that. It’s not the country I see around me, not the future that I believe in. |
| “I know that things are still difficult, bills are too high, getting ahead can feel tough, and there are still too many obstacles in the way for businesses. And so, our central economic objective is to change that.” | “I know that things are still difficult, bills are too high, getting ahead can feel tough, and there are still too many obstacles in the way for businesses. And so, our central economic objective is to change that.” |
| The chancellor defended her “securonomics” approach to the economy, lauding the government’s investment in projects across the country and support for major companies on the brink. | The chancellor defended her “securonomics” approach to the economy, lauding the government’s investment in projects across the country and support for major companies on the brink. |
| “No longer would we turn a blind eye to where things are made and who makes them, or shrug our shoulders when the national interest is on the line, because a strong economy must rest on strong foundations,” she said. | “No longer would we turn a blind eye to where things are made and who makes them, or shrug our shoulders when the national interest is on the line, because a strong economy must rest on strong foundations,” she said. |
| She said the government would “never, ever squander” the trust Labour had earned to run the economy before the general election, even though that has been battered since by decisions over national insurance and welfare cuts. | She said the government would “never, ever squander” the trust Labour had earned to run the economy before the general election, even though that has been battered since by decisions over national insurance and welfare cuts. |
| Reeves was interrupted by a heckler waving a Palestinian flag. To a standing ovation, she responded: “We understand your cause, and we are recognising a Palestinian state, but we are now a party in government, not the party of protest.” | |
| Her speech also contained several previously trailed announcements about new policies, from libraries in every school to a jobs guarantee for young people out of employment for more than 18 months and an EU youth mobility scheme. | |
| Her spokesperson said the youth jobs guarantee would involve a placement for people part-funded by the government and partly by businesses. The exact ages of eligibility and the funding model are yet to be worked out but the Treasury is seeking to work with industry to devise a plan, which could involve time-limited placements in hospitality, manufacturing, councils and other sectors. | |
| The spokesperson said the commitment to new libraries in schools would not involve new funding but it be paid for out of existing budgets set at the spending review. |