Rachel Reeves – 2022 Response to the Chancellor’s Fiscal Statement

The speech made by Rachel Reeves, the Shadow Chancellor of the Exchequer, in the House of Commons on 23 September 2022.

Thank you, Mr Speaker.

I would like to welcome the Rt Hon Gentleman to his place and I thank him for his statement.

He is the third Conservative Chancellor this year – and it’s still only September.

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 higher than it needs to be, just as interest rates rise.

And 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 inflation.

It is a budget without figures.

A menu without prices.

What, Mr Speaker, has he got to hide?

This statement is an admission of 12 years of economic failure.

And 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 and chaos and confusion there has been one person here throughout.

The Prime Minister.

She’s been a minister for a decade, out defending every single economic decision.

When the Prime Minister says she wants to break free from the past, what she really means is she wants to break free from her own record.

Because where have the last 12 years left us?

Lower growth, lower investment, lower productivity.

And today, we learn we have the lowest consumer confidence since records began.

The only things that are going up are inflation, interest rates and bankers’ bonuses.

As the Tories become more and more detached from reality millions of people are lying awake at night worrying about how they’ll 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 rise in prices 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 onto borrowing to be paid for by current and future taxpayers.

This Prime Minister and Chancellor have no regard for taxpayers’ interests or the concerns of working people.

It’s not just that this Conservative government is not working for ordinary families – it’s actively working against them.

Mr Speaker, we have had six so-called growth plans from the Conservatives since 2010.

A litany of failure.

I do at least commend the Chancellor on having the ambition of achieving two and a half percent growth a year – the last Labour government’s rate of growth.

But to achieve that sort of growth and for that growth to be sustainable, you need a credible plan.

And the truth is that this government does 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 isn’t a great new idea as much as he’d like us to think so.

What this plan adds up to is to keep corporation tax where it is today and to take national insurance, which they voted to increase, back to where it was last March.

Some new plan!

And it’s based on an outdated ideology that says if we simply reward those who are already wealthy, the whole of society will benefit.

They’ve decided to replace levelling up with trickle down.

As President Biden said this week, 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.

Mr Speaker, it’s not just this side of the House with concerns.

The Rt Hon Member for Surrey Heath, described the Prime Minister’s economic plans as ‘taking a holiday from reality’.

The Rt Hon Member for Richmond, two Chancellors ago, was perhaps too honest with his party when he told them:

“We tried having a … low corporation tax … as a means of getting businesses to invest.”

But that “It has not worked.”

The new Chancellor and Prime Minister used to agree with that.

They voted for the corporation tax rise, and Labour supported it too.

Members opposite might have changed their minds, 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’ own record shows that.

Britain has the lowest headline rate of corporation tax in the G7 but we also have the lowest rate of private investment.

That’s why Labour would do what businesses are actually asking for:

Using targeted investment allowances to boost productivity and growth.

And scrapping outdated and unfair Business Rates, that harm our small businesses and high streets replacing them with a system that’s fit for the 21st Century.

What about their other policies?

Let’s take these so-called ‘investment zones’.

Again, these are nothing new.

Every time they were tried, all they have achieved was moving growth around
the country, not creating growth.

The best way out of this high tax, low growth spiral that the Tories have created is to get the economy firing on all cylinders in all parts of the country.

It’s going to take much more than a stamp duty cut to get our economy back on track and home ownership back to the levels last seen under the Labour government.

These stamp duty changes have been tried before.

Last time they 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?

And can the Chancellor confirm today how much of his stamp duty cut will go to those purchasing multiple properties?

Instead of a stamp duty rates going up and down like a yo-yo, we’ve got to get building.

We need to target support at first time buyers and tackle the issue of homes being sold to overseas investors.

The Chancellor has made clear today who his priorities are. Not a plan for growth, a plan to reward the already wealthy.

A return to the trickle down of the past, back to the past, not a brave new future.

This Chancellor and Prime Minister proclaimed in Britannia Unchained that ‘the British are amongst the worst idlers in the world’.

And to prove they mean it, instead of supporting working people this government is cutting their rights at work.

Working people are the backbone of Britain and should be respected not sneered at.

Labour will always stand up for their rights.

The Chancellor has in effect today admitted he has broken his fiscal rules.

This is the 10th time the Tories have broken their own rules, something that I’m sure the Office for Budget Responsibility would have confirmed if they had been allowed to publish their forecasts today.

Mr Speaker, it is unprecedented to have a fiscal statement of this scale with no independent forecasts from the Office for Budget Responsibility.

Never has a government borrowed so much and explained so little.

Economic institutions matter.

Yet this government has 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.

This is no way to build growth.

Mr Speaker, Labour believes in wealth creation.

We will always support enterprise, creativity and hard work.

We want British businesses to grow, to be successful and contribute to our wider prosperity.

We don’t believe – as the Chancellor and Prime Minister do – that British workers are idlers.

We understand that it is the workers who turn up every day to make the 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.

It is 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.

Mr Speaker this statement is more than a clash of policies.

It is a clash of ideas – two different ideas of how our country prospers.

If you’re a pensioner worried about the cost of living, a working family seeing your mortgage costs going up or a small business owner whose costs are spiralling, the government’s announcements today do little to reassure you.

Bigger bonuses for the bankers and huge profits for energy giants, shamelessly shielded by Downing Street.

And all the while, ministers pile the crushing weight of all these costs onto the backs of taxpayers.

The Conservatives can’t solve the cost of living crisis.

The Conservatives are the cost of living crisis.

And our country cannot afford them anymore.