Reynolds: Tory economic policy “reckless and a gamble with people’s futures”

Katie Neame

Jonathan Reynolds has denounced the government’s economic policy as “unsustainable, dangerous, reckless and a gamble with people’s futures” amid the ongoing fallout from Liz Truss’ mini-Budget.

Interviewed on Sky News this morning, the Shadow Business Secretary stressed that Labour has a “completely different approach to economic policy”, declaring: “We believe you can borrow money in a crisis, that’s okay.

“You can borrow money to invest in assets and de-risk climate change progress and therefore bring more private money into the economy. We don’t believe you can borrow money for tax cuts for already wealthy people as a growth policy or as a sustainability policy.”

On how Labour would fund the 1p cut in the basic rate of income tax – one of the government policies the opposition plans to maintain – Reynolds said the party would raise more revenue in part through its windfall tax, which he described as a “bigger and longer tax than the one the government have put in place”.

“We’ve already announced things like abolishing non-dom status, which would bring in additional revenue, so we would be raising more revenue,” Reynolds added.

The Labour frontbencher told viewers: “Our position always has been, taxes are high in this country because of the government’s poor record on growth, so I know they accept that bit of it.

“But I’m afraid – and if we had an OBR assessment of the Budget we’d be able to break down some of these individual decisions – I’ve got to be absolutely clear with you, we reject this entire government’s approach to economic policy as unsustainable, dangerous, reckless and a gamble with people’s futures.”

The mini-Budget, delivered by Kwasi Kwarteng on Friday, set out a series of tax cuts, including scrapping the top rate of income tax for the highest earners, cancelling a planned rise in corporation tax and reversing the increase in National Insurance.

The government’s decision not to engage with the Office for Budget Responsibility (OBR) ahead of the mini-Budget has been widely criticised. The OBR said on Thursday that it could have produced an assessment of the proposals in time but was not asked to do so by the Chancellor.

Truss and Kwarteng met with the OBR this morning. The OBR announced following the meeting that it would deliver a forecast to the Chancellor on October 7th, which “will, as always, be based on our independent judgment about economic and fiscal prospects and the impact of the government’s policies”.

The Bank of England was forced into emergency action on Wednesday amid concerns that the plans set out by Kwarteng in the mini-Budget could lead to mass insolvencies of pensions funds.

The Bank pledged to buy £65bn of government bonds over the next fortnight. It said its decision to buy the bonds at an “urgent pace” was driven by concern over “a material risk to UK financial stability”.

Truss has resisted calls to reverse the government’s plans. On a broadcast round with regional media on Thursday, the Prime Minister said: “I have to do what I believe is right for the country and what is going to help move our country forward.”

Rachel Reeves has demanded that Tory MPs join Labour in demanding that parliament be recalled early to reverse the mini-Budget. Parliament is currently in recess for party conferences and is due to return on October 11th.

The Shadow Chancellor said on Thursday: “If the Prime Minister continues to prioritise saving her face over saving people’s homes, Tory MPs must join Labour in calling for parliament to be recalled so this kamikaze budget can be reversed. Failure to do so will make them complicit in this reckless bout of economic self-harm.”

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