Rachel Reeves says tough choices will be worth it

Rachel Reeves has promised Britain’s “best days lie ahead” as she sought to strike a more optimistic tone in her first speech to the Labour Party conference as chancellor.

Reeves has been accused of talking the economy down by warning of “tough choices” to deal with what she says is a worse-than-expected inheritance from the Conservatives.

In her speech, she said: “My ambition for Britain knows no limits because I can see the prize on offer if we make the right choices now.”

But she faces a backlash from the trade unions and many Labour members over her decision to strip winter fuel payments from 10 million pensioners, with a conference debate expected later this week.

As Reeves stood up to deliver her 25 minute speech, news broke that nurses in England have rejected the government’s offer of a 5.5% pay rise.

Then, a few minutes into the speech, the chancellor was interrupted by a heckler protesting about continued arms sales to Israel while the war with Hamas in Gaza continues.

A campaign group called The Climate Resistance has claimed responsibility for the protest.

As the protester was dragged out of the hall, the chancellor won a standing ovation for saying that “this is a changed Labour Party and not a party of protest”.

She also received a rapturous response when she promised a “war on Tory waste”, with the appointment of a Covid corruption commissioner to help recoup £674m of disputed contracts the Conservatives had agreed to waive.

To loud applause, she said: “That money belongs in our police, it belongs in our health service and belongs in our schools. Conference, we want that money back.”

She announced that Labour’s promise to set up free breakfast clubs would be piloted in 750 primary schools in England from April, at a cost of £7m.

This will be followed by a national rollout, she told the conference, describing it as “an investment in our young people, an investment in reducing child poverty and investment in our economy”.

Defending her decision to cut winter fuel payments for many pensioners, she said: “It was made clear to me that failure to act swiftly could undermine the UK’s fiscal position with implications for public debt, mortgages and prices.

“And so, I took action to make the in-year savings necessary.”

Looking ahead to her first Budget on 30 October, Reeves said there would be no increases in income tax, national insurance or VAT – and “no return to austerity”.

She said it would be a Budget for economic growth and investment – but gave few clues about tax and spending decision it might contain.

Instead, she told spoke of the “prize” on offer from economic stability and a new industrial strategy to spread wealth across Britain.

“Yes, we must deal with the Tory legacy and that means tough decisions, but I won’t let that dim our ambition for Britain,” she told delegates.

“So, it will be a budget with real ambition, a budget to fix the foundations, a budget to deliver the change that we promised, a Budget to rebuild Britain.”

The BBC’s Faisal Islam points out that consumer confidence was hit, at least this month, and some retailers spooked by disappointing sales after this talk of pain.

The chancellor was sending a message that the tax rises, when they come, will not primarily hit hard-pressed working families, he says.

He says the UK is heading towards some changes to the rules on government borrowing in order to allow more investment.

Reeves also used her speech to announce new measures to target tax dodgers and help close the £39.8bn shortfall between the amount of tax owed and that which has actually been collected.

The plans include recruiting 5,000 more tax officials over the next five years, with 200 new compliance officers set to start at HMRC in November.

Labour’s leadership team has also come under fire from one of their own MPs over accepting donations of clothes despite their six-figure salaries.

Speaking ahead of her speech, Reeves said she could “understand why people find it a little bit odd that politicians get support for things like buying clothes”.

She said that while shadow chancellor a friend had given her clothes to wear on the campaign trail and for big speeches.

She added that the donations had been declared but that she would not continue to accept such donations while a government minister.