Labor leader Sir Keir Starmer will use his conference speech on Tuesday to tell British voters his party stands for “sound money” while he seeks to wrest the mantle of economic literacy from the ruling Conservatives.
He will slam Chancellor Kwasi Kwarteng’s high-borrowing, tax-cutting mini-budget announced last week, which rattled markets and sent sterling to historic lows on Monday. The plan provided for a range of tax cuts, including the abolition of the 45 per cent upper tax band that applies to income over £150,000.
“What we have seen from the government in the past few days has no precedent,” Starmer will say. “You’ve lost control of the UK economy – and for what? For tax cuts for the richest 1 percent of our society.”
Starmer will claim that Labor is “the party of the centre” and describe it as “the political wing of the British people”, borrowing an expression from former Labor leader Sir Tony Blair.
On Monday, Labour’s shadow chancellor Rachel Reeves promised that if she took power the party would reintroduce the top income tax band and use the proceeds to increase the number of doctors and nurses in the NHS.
[Trickle-down economics] has been tried, tested and failed
She told delegates at the Liverpool conference that a Labor government would need the £2bn.
The money would fund the training of more than 5,000 new health visitors, create an additional 10,000 nursing and midwifery positions each year, and double the number of medical students.
She accused new Prime Minister Liz Truss of abandoning the previous Tory government’s “leveling” agenda aimed at rebalancing the economy away from London and the South East. Instead, Truss pursued a “trickle-down economics” in which taxes are adjusted to help wealthy people achieve broader economic growth. “This idea has been tried, tested and failed,” she said.
Reeves said that as chancellor she would keep Britain’s public finances firmly under control, unlike Kwarteng, who last week announced more borrowing than at any time since 1972 at a time when inflation was already high and interest rates were rising.
The so-called mini-budget rocked markets as investors let sterling plummet and gilt yields soared. “The message from financial markets was clear on Friday and this morning that message is even clearer: sterling is down. That means higher prices as import costs increase,” she said.
Reeves said a Labor government would ensure all its policies were “carefully calculated and fully funded” as it accused the Conservatives of breaching their own budgetary rules 10 times in the 12 years they have been in power .
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The shadow chancellor berated the Tories for “the more than £50 billion piled up in national debt each year for their reckless choice to shift all costs onto credit”.
A Labor government would also overturn Kwarteng’s £17bn annual corporate tax cut.
Rather, one of the biggest economic policy differences between the government and the opposition at the moment concerns the extent of the measures to be taken to deal with the energy crisis.
The Government said on Friday its plan to cap energy prices would cost £60bn for just six months. The bailout – made up of £31bn for households and £29bn for businesses – will be largely paid for by huge borrowing.
Labor’s energy bailout plan, announced in August, would have cost just £29bn over the same period because it was only targeted at households. The party said it would have been funded by extending the existing Windfall energy tax, scrapping the government’s £400 general payment this autumn and reducing government debt repayments as the intervention would have lowered inflation.
Labor would only have a £1bn support package
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