Labour may borrow to invest while following fiscal rules with ‘iron discipline’
Shadow chancellor Rachel Reeves made the pledge as she promised planning reforms to make it easier to build critical infrastructure.
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Your support makes all the difference.A Labour government would be prepared to borrow to invest, Rachel Reeves has said, but only within her fiscal rules which she will stick to with “iron discipline”.
The shadow chancellor will use her speech at Labour’s annual conference in Liverpool on Monday to set out plans to revamp the UK’s “antiquated” planning system to “get Britain building again”.
Speaking to broadcasters ahead of her address, Ms Reeves reiterated her commitment to fiscal responsibility ahead of a likely general election next year.
If we were growing now at the same rate that we did in the 13 years of Labour government, then we would have tens of billions of pounds more without raising a single tax to invest in our public services
She set out her rules as paying for day-to-day expenditure through tax receipts, getting debt down as a share of the economy “and then only subject to that will we invest in things that are going to grow our economy”.
“We will only borrow if it is consistent with those fiscal rules,” she said, adding that could be “if debt is coming down by the end of the Parliament”.
Pressed on whether she would allow borrowing to invest if she enters No 11, she said: “As all countries do and as this Government does today. We will take it up to the level that is needed to compete internationally.”
The Labour frontbencher said the £28 billion the party plans to eventually invest annually in a green energy transition is “not all additional money”.
Asked where the cash would come from, she said: “Obviously, the Government is already spending money on some of these projects – the battery factory that they announced a few weeks ago. So, this is not all additional money.
“It is the total spending we want to see to help us secure for Britain these jobs in the industries of the future.”
Earlier, the director of the Institute for Fiscal Studies said it would be “very hard” to improve public services without additional tax rises.
Asked if Labour could stick to their spending plans without substantial rises in taxes, Paul Johnson told BBC Radio 4’s Today programme: “I’m not convinced that either a Labour or a Conservative government could do that.”
He said Labour’s plans to improve public services and the welfare system would be “very hard indeed” without “some tax rises, at least in the short run until and unless growth really does change”.
Ms Reeves responded by saying Labour’s top priority is growing the economy, because “if we were growing now at the same rate that we did in the 13 years of Labour government, then we would have tens of billions of pounds more without raising a single tax to invest in our public services”.
In her speech to Labour’s annual gathering, Ms Reeves will outline plans to modernise the UK’s creaking infrastructure as part of efforts to boost growth.
Planning applications would be fast-tracked for battery factories, laboratories and 5G infrastructure under the proposals.
She will tell the conference: “Labour’s task is to restore hope to our politics. The hope that lets us face the future with confidence, with a new era of economic security because there is no hope without security.”
She will say voters face the choice of “five more years of the Tory chaos and uncertainty, which has left working people worse off or a changed Labour Party ready to strengthen Britain’s foundations, so working people are better off”.
Her speech comes after Prime Minister Rishi Sunak cancelled the HS2 rail line north of Birmingham due to spiralling costs and repeated delays.
The shadow chancellor will claim Labour would form “a government siding with the builders not the blockers”.
Ms Reeves will say decision times for major infrastructure projects have increased by 65% since 2012, now taking four years, and will promise a “once-in-a-generation” set of reforms to speed this up.