The Growth Plan

Rachel Reeves Excerpts

Friday 23rd September 2022 Commons Chamber

[Rachel Reeves (Leeds West) (Lab)]

Thank you, Mr Speaker. I welcome the right hon. Gentleman to his place. I thank the Chancellor for his comprehensive demolition of the record of the last 12 years—their record; their failure; their vicious circle of stagnation.

The Chancellor has confirmed that the costs of the energy price cap will be funded by borrowing, leaving the eye-watering windfall profits of the energy giants untaxed. The oil and gas producers will be toasting the Chancellor in the boardrooms as we speak, while working people are left to pick up the bill. Borrowing is higher than it needs to be just as interest rates rise, yet the Chancellor refuses to allow independent economic forecasts to be published, which would show the impact of this borrowing on our public finances, on growth and on inflation. It is a Budget without figures, a menu without prices. Mr Speaker, what has the Chancellor got to hide?

This statement is an admission of 12 years of economic failure. Now, here we are: one last throw of the dice; one last claim that these Ministers will be different. For all the chopping and changing, all the chaos and confusion, one person has been there throughout: the Prime Minister. She has been a Minister for a decade and defended every single economic decision. So when the Prime Minister says that she wants to break free from the past, what she really means is that she wants to break free from her own failed record, because where have the last 12 years left us? Lower growth, lower investment, lower productivity, and today we learn that we have the lowest consumer confidence since records began. The only things going up are inflation, interest rates and bankers’ bonuses—[Hon. Members: “And borrowing.”] And borrowing.

As the Tories become more and more detached from reality, millions of people—our constituents—are lying awake at night, worried about how they are going to make ends meet. Labour won the argument that action on energy bills was necessary, but the question is, who pays? The energy producers who have profited so much from the price rises should make a contribution, but when the country asked who should foot the bill for their energy rescue package, the Conservatives responded, “You, the British people.”

Instead of standing up for working people, the Conservatives chose to shield the gigantic windfall profits of the energy giants, leaving tens of billions of pounds on the table and pushing all the costs on to Government borrowing, to be paid for by current and future taxpayers. The Prime Minister and Chancellor have no regard for taxpayers’ interests or the concerns of working people. It is not just that the Conservative party is not working for ordinary families; it is actively working against them. We have had six so-called plans for growth from the Conservatives since 2010. Here they are: a litany of failure, every single one of them.

I do at least commend the Chancellor for his ambition to achieve 2.5% growth a year—that was the last Labour Government’s rate of economic growth—but to achieve that sort of growth, and for it to be sustainable, he needs a credible plan, and the truth is that the Government do not have one. The Prime Minister and Chancellor are like two desperate gamblers in a casino, chasing a losing run. The argument peddled by the Chancellor today is not a great new idea, or a game-changer, as he said, much though he would like us to think so. The plan adds up to keeping corporation tax where it is, and taking national insurance contributions back to where they were in March. Some new plan! It is all based on an outdated ideology that says that if we simply reward those who are already wealthy, the whole of society will benefit.

The Government have decided to replace “levelling up” with “trickle down”. President Biden said this week that he is

“sick and tired of trickle-down economics”,

and he is right to be. It is discredited; it is inadequate; and it will not unleash the wave of investment that we need. It is not just Opposition Members who have these concerns; the right hon. Member for Surrey Heath (Michael Gove) described the Prime Minister’s economic plans as a “holiday from reality”. The right hon. Member for Richmond (Yorks) (Rishi Sunak), who was Chancellor two Chancellors ago, was perhaps too honest with his party. He said:

“we tried having a…low corporation tax rate as a means of getting businesses to invest”,

but

“it hasn’t worked.”

The new Chancellor and new Prime Minister used to agree with that. Indeed, they voted for a corporation tax rise. Labour supported it, too. Government Members might have changed their mind, but we have not, because the evidence shows that low rates of corporation tax are not the best way to boost investment and productivity, and the Tories’ record shows that.

Britain has the lowest headline rate of corporation tax in the G7, but we also have the lowest rate of business investment in the G7. That is why Labour would do what businesses are actually asking for: use targeted investment allowances to boost productivity and growth, scrap outdated and unfair business rates that harm our high streets and small businesses, and replace them with a system that is fit for the 21st century.

What about the Government’s other policies? Let us take the so-called investment zones. Again, these are nothing new. Every time that they have been tried, all that they have done is move growth around the country; they have not created it. The best way out of the high-tax, low-growth spiral that the Conservatives have created is to get the economy firing on all cylinders in all parts of the country. It will take much more than a stamp duty cut to get our country back on track, and to get home ownership back to levels last seen under a Labour Government.

These stamp duty changes have been tried before. The last time the Government did it, a third of the people who benefited were buying a second or third home, or a buy-to-let property. Is that really the best use of taxpayers’ money, when borrowing and debt are already so high? Can the Chancellor confirm today how much of the stamp duty cut will go to those purchasing multiple properties? Instead of letting stamp duty go up and down like a yo-yo, we need to get building. We need to target support at first-time buyers and tackle the issue of homes being sold to overseas investors.

Today, the Chancellor has made it clear who his priorities are. This is not a plan for growth, but a plan to reward the already wealthy. It is a return to the trickle down of the past. It is back to the future, not a brave new era. The Chancellor and the Prime Minister proclaimed in “Britannia Unchained” that

“the British are among the worst idlers in the world.”

To prove that they mean it, instead of supporting working people, this Government are cutting their rights at work. Working people are the backbone of Britain, and they should be respected, not sneered at. Labour will always stand up for their rights.

The Chancellor has in effect today admitted that he has broken his own fiscal rules. This is now the 10th time the Tories have broken their own fiscal rules—something I am sure the Office for Budget Responsibility would have confirmed, had it been allowed to publish its forecasts today. It is unprecedented to have a fiscal statement of this scale with no independent forecasts from the Office for Budget Responsibility. Never have a Government borrowed so much and explained so little. Economic institutions matter, yet this Government have undermined the Bank of England, sacked the respected permanent secretary at the Treasury and silenced the Office for Budget Responsibility. That is no way to build confidence; that is no way to build economic growth.

Labour believes in wealth creation. We will always support enterprise, creativity and hard work. We want British businesses to grow, to be successful and to contribute to our country’s prosperity. What we do not believe, as the Chancellor and Prime Minister do, is that British workers are idlers. We understand that it is the workers, who turn up every day to make a great product at a factory or deliver a great service in the store, who generate growth. It is the teachers giving the young people the skills they need, and the doctors and nurses keeping people well. It is the entrepreneur taking a personal risk to start a new business. These are the people who generate growth, and they all deserve to share in it too.

This statement is more than a clash of policies; it is a clash of ideas—two different ideas about how our country prospers. If you are a pensioner worried about the cost of living, a working family seeing your mortgage rate going up or a small business whose costs are spiralling, the Government’s announcements today do little to reassure you: bigger bonuses for bankers, huge profits for energy giants shamelessly shielded by Downing Street, and all the while Ministers pile the crushing weight of all those costs on to the backs of taxpayers. The value of sterling has fallen. We can see it, half the Chancellor’s colleagues suspect it and the financial markets know it. The verdict is clear: when it comes to the economy this Tory leadership do not know what they are doing. The Conservatives cannot solve the cost of living crisis; the Conservatives are the cost of the living crisis. Our country cannot afford them anymore.