Reeves: Labour would “get a grip” on spending but austerity “not the answer”

Rachel Reeves has said that as Chancellor she would “get a grip on government spending” but that cuts to public spending on “our police, our health service and our schools” is “not something that I would support”.

In an interview with BBC Radio 4’s Today programme this morning, the Shadow Chancellor argued that the problem with the apology delivered by Liz Truss on Monday for the recent economic turmoil is “that the damage has already been done” and that it is “ordinary working people who are paying the price”.

Reeves said the country needs “financial stability but also a plan to grow the economy, recognising that it is working people that must be at the centre of that plan” and told listeners that it is “only Labour, now, that can offer that”.

Her comments followed an emergency statement by Jeremy Hunt on Monday during which the new Chancellor, appointed last week following the sacking of Kwasi Kwarteng, announced a U-turn on “almost all” the tax measures in the ‘mini-Budget’.

Put to her that Labour agrees with the action taken by Hunt, Reeves said “there’s a number of things that we would be doing that the Conservatives refuse to do still at this stage”, offering as examples the abolition of the controversial non-dom tax status and the extension of the windfall tax on oil and gas companies.

She also highlighted that she has been calling for the publication of the independent forecast from the Office for Budget Responsibility because “at the foundation of a strong economy is respect for those economic institutions that underpin it”. She said waiting “another two weeks” for the forecast is “not good enough”.

Challenged over why the Labour Party is opposing the National Insurance contributions increase to pay for health and social care, the Shadow Chancellor said: “We are all still in the dark about the scale of the problem that the Conservatives have created because we still lack that independent forecast.”

She told listeners that Labour is opposed to the rise “because we’re still in the middle of a cost-of-living crisis and increasing taxes on ordinary working people and the businesses who employ them” is “not the right thing to do”.

Asked whether the party is still in support of reducing the basic rate of income tax, she said: “We want taxes on working people to be low but the thing that has got to come first is economic stability and fiscal responsibility and it is now clear that the government cannot be cutting taxes at the moment because of the mess.

“So, we accept that this is not the right time to be doing further tax cuts because the problem is that all of these unfunded tax cuts – and I’ve been clear that I’ll pay for every announcement that we put in our next manifesto – the problem with unfunded tax cuts is that in the end they will be paid for with higher interest rates and higher inflation.”

Asked whether she would cut departmental budgets as Chancellor, as Hunt warned that he will do, Reeves said: “We don’t know the scale of the damage so I’m not going to go through individual changes but the Chancellor – the latest Chancellor, the fourth in four months – was a key architect of austerity season one.

“And he’s now saying that what we need is austerity season two. But the truth is our public services, our schools, our hospitals are already on their knees.”

She added that “nobody was speaking about spending cuts a month ago” and said they are now “on the table” because of “the huge damage that the Tories have done to our economy”.

“We need to restore our economic credibility. We need to show that respect for institutions, including publishing the independent OBR forecast, but austerity season two is not the answer to grow our economy and to create that economic stability,” she said.

Pressed on whether there would make spending cuts as Chancellor, she said that “there are savings that could be made”, citing funds wasted on public contracts awarded to “friends and donors of the Conservative Party”, unusable personal protective equipment and money written off by Rishi Sunak as a result of fraud.