Rachel Reeves – 2024 Speech on the Economy, Welfare and Public Services
The speech made by Rachel Reeves, the Chancellor of the Exchequer, in the House of Commons on 22 July 2024.
It is a pleasure to open today’s King’s Speech debate on behalf of His Majesty’s Government. I always enjoy debating with the right hon. Member for Godalming and Ash (Jeremy Hunt), though I must say I rather prefer doing so from this side of the Chamber. [Hon. Members: “Hear, hear.”]
I appreciate the shadow Chancellor’s generous words on my appointment and also his tribute to officials, who I can confirm are indeed first rate. It has been more than 14 years since a Labour Government were in office for a state opening of Parliament—14 years of chaos, 14 years of economic irresponsibility, 14 years of wasted opportunities and 14 years since there has been a Labour Chancellor of the Exchequer standing at this Dispatch Box. Today, I pay tribute to my most recent Labour predecessor, the late Lord Darling. He was an outstanding Chancellor, a kind man and a good friend.
Mr Speaker, it is also the very first time that there has been a female Chancellor of the Exchequer. On my arrival at the Treasury, I learned that there is some debate about when the first Chancellor was appointed. It could have been 800 years ago, when one Ralph de Leicester was given the title of “Chancellor of the Exchequer” for the first time, or, 900 years ago, when “Henry the Treasurer” was referenced in the Domesday Book. It could even have been 1,000 years ago, when Alfred the Great was in effect the first Master of the Mint. Whichever it is, I am sure the whole House would agree on one thing—that we have waited far too long for a woman to be the Chancellor of the Exchequer. [HON. MEMBERS: “Hear, hear.”]
I stand here today proud, but also deeply conscious of the responsibility that I now have: a responsibility to women across the country whose work is too often undervalued; and a responsibility to every young woman and girl, who should know that there is no ceiling on their ambitions and no limit on their potential.
Sarah Edwards (Tamworth) (Lab)
Seven Tory men have stood at that Dispatch Box over the past 14 years and the result has been an economic crisis, crumbling public services and a cost of living crisis. Can we expect a change of approach from the new female Chancellor of the Exchequer?
Rachel Reeves
One thing is that I hope to be in post for a bit longer than some of my predecessors.
As tempting as it is, I do not intend to conduct a full sweep of the past 1,000 years of economic history from the Dispatch Box today—[Hon. Members: “Ah”!] I am sorry. However, we must talk about the past 14 years. I warned that whoever won the general election would inherit the worst set of circumstances since the second world war, and I have seen nothing to change my mind since I arrived at the Treasury. I will update the House on our public spending inheritance before Parliament rises for recess.
I heard what the shadow Chancellor said from the Dispatch Box now and on the television yesterday, which was to claim that I should be grateful for what he has left us. That is unbelievable, because he knows the truth and is now trying to rewrite history. In doing so, he has reminded the British people why the Conservatives lost the election. They are out of touch, deluded and unable to defend the indefensible. In the weeks ahead, it will become clear what those in his party did. They stored up problems, failed to take the tough decisions and then they ran away, leaving it to us—the Labour Government—to pick up the pieces and clear up their mess.
Today, I want to focus on one thing above all else: economic growth. Since 2010, Conservative Chancellor after Conservative Chancellor, including the now shadow Chancellor, stressed the importance of growth. We have had more growth plans than we have had Prime Ministers or Chancellors, and that is quite a lot, but growth requires more than talk; it requires action. Like so much else with the previous Administration, when we scratch beneath the surface the façade crumbles, and all that is left is the evidence of 14 years of failure.
Matt Western (Warwick and Leamington) (Lab)
I congratulate my right hon. Friend on her appointment; she is making an excellent speech. Friday’s ONS report showed that public sector borrowing was 25% higher than forecast. Does she agree that that underlines why it was so important to have a fully costed and fully funded manifesto to restore confidence in the public finances, and that it was a surprise that certain other parties did not follow the same route?
Rachel Reeves
I thank my hon. Friend for that question. He speaks powerfully, and I pay tribute to his work in the last Parliament, particularly around education and skills. This is a really important point. For me, the most important pages of the manifesto that we stood on were the three grey pages at the back of it, which set out all our spending commitments and how they would be paid for. That was important, because to earn the trust of the electorate parties must be really clear about where the money will come from and what they will use it for. That is what we did in our manifesto, and it is what we will do in Government.
The shadow Chancellor made some points about GDP, comparing ours with that of other countries, but since 2010 UK GDP per capita—that is the most important measure, because it reflects how people feel and the money that they have—has grown slower than the G7 average, slower than the EU average, and slower than the OECD average. Treasury analysis that I requested when I became Chancellor shows that, had the UK economy grown at the average OECD rate these last 14 years, our economy would be over £140 billion bigger today. That could have brought in an additional £58 billion of tax revenues in the last year alone—money that could have been used for our schools, hospitals and other vital public services. Growth is about more than just lines on a chart; it is about the money in people’s pockets, and Treasury analysis shows that achieving the rate of growth of similar economies would have been worth more than £5,000 for every household in Britain.
The shadow Chancellor stood up and once again claimed that he bequeathed a great legacy. Seriously? The last Parliament was the first on record where living standards were lower at the end than at the start. The highest level of debt since the 1960s, the highest tax burden in 70 years, mortgages through the roof, the economy only just recovering after last year’s recession, economic inactivity numbers last week showing a further rise, and borrowing numbers last week showing over £3 billion more borrowing than the OBR expected—that is the Conservatives’ legacy. If that is a good inheritance, I would hate to see what a bad one looks like. I think deep down the shadow Chancellor knows that. In fact, he does know it.
Yesterday, the shadow Chancellor admitted what we all know: that the manifesto that he campaigned on was undeliverable, and the money for the tax cuts that he promised simply was not there. If he wanted to show the country that his party has listened, and learned from its mistakes, he would have used his speech this afternoon to apologise, but he did not, and that tells us everything that we need to know about this Conservative party: party first, country second; political self-interest ahead of the national interest; irresponsibility before the public good. Let me say this to the Conservative party, “We will not stop holding you responsible for the damage that you have done to our economy and to our country.” Never again will we allow the Conservatives to crash our economy. They failed this country. They shied away from tough choices, and we will not repeat their mistakes. It falls on us, this new Labour Government, to fix the foundations so that we can rebuild Britain and make every part of our country better off. We will govern through actions, not words, and we have already begun to do just that, because there is no time to waste.
Less than 72 hours after I was appointed as Chancellor, I put growth at the very heart of our work. Working alongside my right hon. Friend the Deputy Prime Minister, I set out reforms to our planning system—reforms that the Conservative party did not deliver in 14 years. Our reforms restore mandatory targets to build the homes that we desperately need, end the absurd ban on onshore wind to deliver home-grown cheap energy and recover planning appeals for projects that sat on the desks of Ministers in the last Parliament for far too long. Those are tough decisions that the Conservative party already opposes.
Why was that my first act as Chancellor? Because getting our economy growing is urgent, and this King’s Speech shows that we are getting to work.
Mr Mark Francois (Rayleigh and Wickford) (Con)
On the matter of mandatory housing targets, having been a constituency MP for 23 years and seen them tried in a number of different ways, may I humbly offer the Chancellor this, with all sincerity? There is such a thing as good development, but it only works if it is something that we do with people and not to people. This Stalinist approach will not work.
Rachel Reeves
I have been compared to a lot of things, Madam Deputy Speaker, but I have never been compared to Joseph Stalin.
Our approach is a brownfield-first approach. We will reintroduce those mandatory targets; of course it is up to local authorities and local communities to decide where the housing should be built, but the answer cannot always be no. If the answer is always no, we will continue as we are, with home ownership declining and mortgages and rents going through the roof. On the Government side of the House, we are not willing to tolerate that.
This King’s Speech shows that we are getting to work. As my right hon. Friend the Prime Minister set out, our programme for government is founded on principles of security, fairness and opportunity. Our No. 1 mission is to secure sustained economic growth in our great country through a new partnership between Government, business and working people that prioritises wealth creation for all of our communities.
We will fix the foundations of our economy so we can rebuild Britain and make every part of our country better off. There are a number of important pieces of legislation in the King’s Speech that will help us to grow the economy. In this speech, I will focus on three in particular: the Budget Responsibility Bill to restore economic stability, the national wealth fund Bill to drive investments and the pension schemes Bill to reform our economy. Those Bills speak not just to our programme for government, but also to trust in politics. They show that we will govern as we campaigned and that we will meet our promises to the British people.
In the election campaign, I said the first step we would take would be to restore economic stability, because stability is the precondition to a healthy, growing economy. It is how we keep taxes, inflation and mortgages as low as possible. After years of irresponsibility, we are putting our economy on firm ground once again. We introduced the new Budget Responsibility Bill on Thursday to deliver on our manifesto commitment to introduce a fiscal lock so that I can keep an iron grip on our country’s finances.
Kit Malthouse (North West Hampshire) (Con)
The Chancellor and I sat on the Treasury Committee together many years ago, and she will know from our time together that economics is as much art as it is science. Given that she is effectively giving a veto over economic policy to the OBR through this Bill, she must recognise that we need to understand what the people in the OBR believe, what their theories of economics are and what principles they attach themselves to. What further scrutiny of the chair of the OBR and the people doing the forecast will be available to this House, given that effectively they will be co-Chancellor with her during the next few years?
Rachel Reeves
The Treasury Committee, as the right hon. Gentleman knows, can call in the chair and other members of the Office for Budget Responsibility, but his comments show exactly why we need this Bill: so that never again can we have a repeat of the mini Budget. The Bill will require every announcement that makes significant permanent changes to tax and spending to be subject to an independent assessment by the Office for Budget Responsibility. Why? Because unfunded, reckless commitments do not just threaten our public finances; they threaten people’s incomes and they threaten people’s mortgages. We saw that in the wake of the mini-Budget presided over by the former Member for South West Norfolk. I understand that she has taken umbrage in recent days at the idea that that episode was disastrous. Well, if any Conservative Member would like to dispute that fact today, I would be more than happy to give way. [Hon. Members: “Come on then!”] They cheered it at the time, but they are not cheering it now, and I do not imagine that they would put it on their leaflets.
The Conservatives should be ashamed of what they did because people up and down the country are still paying the price for the chaos that they caused. We say: never again. The Budget Responsibility Bill will enshrine that commitment in law.
Mr Luke Charters (York Outer) (Lab)
During the pandemic, the friends and family of Conservatives were awarded contracts for work that were never fulfilled. My constituents would love to know how we can get their money back, perhaps through the covid corruption commissioner.
Rachel Reeves
I enjoyed campaigning for my hon. Friend in York Outer, and it is great to see him in his place today. Stability means a tough set of fiscal rules, but it also means spending public money wisely, as he says. The last Government hiked taxes while allowing waste and inefficiency to spiral out of control. At no time was that more evident than during the pandemic, especially when it came to personal protective equipment. The former Prime Minister, when he was Chancellor, signed cheque after cheque after cheque for billions of pounds-worth of contracts that did not deliver for the NHS when it needed it—that is simply unacceptable.
Today, I can announce that I am beginning the process of appointing a covid corruption commissioner to get back what is owed to the British people. That money, which is today in the hands of fraudsters, belongs in our public services, and we want it back. The commissioner will report to me, working with the Secretary of State for Health and Social Care, and their report will be presented to Parliament for all Members to see. I will not tolerate waste. I will treat taxpayers’ money with respect and return stability to our public finances.
The second Bill I will speak to is the national wealth fund Bill. We know that economic stability is vital for investors and for business—the small business looking to grow; the global business looking to expand in the UK; the entrepreneur looking to take their first steps. To support them, stability must sit alongside investment.
Andrew George (St Ives) (LD)
On the effective use of public funds, is the Chancellor aware not only of the alleged corruption in the way that covid aid was distributed, but of the large number of tax loopholes in this economy? For example, in Cornwall, over £500 million of taxpayers’ money was handed out to holiday home owners not only through covid aid but through the small business rate relief scheme and other tax loopholes. At the same time, only a third of that amount has gone into social housing for first-time users. Will she look at the whole issue of parity in the way public funds are used, to support people who need housing?
Rachel Reeves
I welcome the hon. Member back to this place. I enjoyed sparring with him in my early days in Parliament, and it is great to see him back in the House. He is absolutely right that we need to get value for money for all tax incentives. I will ensure that the Treasury and the Ministry of Housing, Communities and Local Government look at the changes that he suggests.
The last Government’s record on investment was dismal. We now sit behind every single member of the G7 when it comes to business investment as a share of GDP. That is not an abstract economic problem. Weak investment holds back productivity and hurts living standards; it leaves households poorer and wages lower.
The King’s Speech deals directly with the need to unlock private investment through a new national wealth fund Bill. That will be supported by an injection of capital, part funded by an increase to the windfall tax on oil and gas giants. It will make transformative investments in industries of the future, such as carbon capture and storage, and green hydrogen. It will mobilise billions of pounds-worth of additional private sector investment in our industrial heartlands and coastal communities while generating a return for taxpayers. The national wealth fund will work with local partners including mayors, as well as the devolved Administrations in Scotland, Wales and Northern Ireland, to develop an investment offer that meets the needs of all our nations and regions. It will simplify a complex landscape of support for businesses today, aligning key institutions such as the UK Infrastructure Bank and the British Business Bank under the one banner of the national wealth fund.
Barry Gardiner (Brent West) (Lab)
I heartily applaud what my right hon. Friend is saying about the renewed windfall tax. Will she also look at the fact that, in this country, we have the lowest basic rate of tax on oil and gas companies anywhere in the world? The average is 74%; in this country, it is 38%.
Rachel Reeves
As my hon. Friend knows, we committed in our manifesto to a three percentage point uplift to the current energy profits levy, which we will use to fund the national wealth fund. That fund will power jobs and prosperity in all parts of our country, and that work is already well under way. In my first week in office, I welcomed the report of the national wealth fund taskforce, and I thank the former Governor of the Bank of England, Mark Carney, and the whole taskforce for their outstanding work. This Bill will put the national wealth fund on a statutory footing with clear objectives, crowding in private investment to create wealth across Britain.
Deirdre Costigan (Ealing Southall) (Lab)
Under the Conservatives, businesses and working people were held back by a complete and abject failure to build the new homes that my constituents in Ealing Southall were crying out for, the laboratory spaces that will provide the jobs of the future, or the national infrastructure needed for businesses and working people to prosper. Will my right hon. Friend assure this House that, under her chancellorship, we will finally get Britain building again?
Rachel Reeves
I welcome the election of my hon. Friend in Ealing Southall—I think her constituents and the whole House can see what a strong advocate she will be for her local community. She is absolutely right: we have to get Britain building again. We have to build the homes and the transport, energy and digital infrastructure that our country desperately needs.
Jim Shannon (Strangford) (DUP)
I thank the Chancellor for giving me the chance to intervene. When it comes to rebuilding and the house building programme that she has suggested should happen, in the papers today, it is suggested that people on a wage of £70,000 cannot get a mortgage. In Northern Ireland, those on a smaller wage cannot get a mortgage either, so can I ask the Chancellor this direct and hopefully positive question, which will hopefully receive a positive answer: what can she do to improve access to mortgages for those who want to own their accommodation, rather than rent it? What can she do to make sure that everyone in the United Kingdom of Great Britain and Northern Ireland can benefit, as she has clearly said they will?
Rachel Reeves
I thank the hon. Gentleman for that intervention. One of the biggest challenges people face with getting a mortgage is building up the deposit. That is why we have committed to a mortgage guarantee scheme, to help those people who cannot rely on the bank of mum and dad to get on the housing ladder. That is a really important commitment, as is our commitment to build the homes: unless we build more homes, home ownership will continue to go backwards, as it did over the past few years.
Alongside stability and investment in our economy must come reform, because delivering economic growth requires tough choices. It means taking on vested interests and confronting issues that politicians have too often avoided. The last Government refused to engage with those choices, and refused to level with the British people about what was required. This Government will be different. We have already demonstrated that through a series of reforms to our planning system, and are bringing forward further legislation in the King’s Speech to get Britain building.
Today, I want to focus on another area of our economy where reform is vital: our pension schemes. People across our country work hard to save for the future; they want a better, more secure retirement with the most generous pension possible. At the same time, British businesses with high growth potential need capital to support their expansion. Pension funds are at the heart of this. There will soon be over £800 billion of assets in defined contribution pension schemes, but for too long, those assets have not been targeted towards UK markets. That has impacted British savers, and it has impacted British business.
The last Government also said that this was a problem, and I welcome that acknowledgement, but they never introduced the legislation needed to make the change. We believe in deeds, not words, so we will strengthen investment from private pension providers by bringing forward the pension schemes Bill in the King’s Speech. It will boost pension pots by over £11,000 through a new and improved value for money framework. Through an investment shift in DC schemes, just a 1% shift in asset allocation could deliver £8 billion of new productive investment into the UK economy.
To ensure that the Bill is as strong as possible, I am today launching a pensions investment review, led by the first ever joint Commons Minister appointed between the Treasury and the Department for Work and Pensions—my hon. Friend the Member for Wycombe (Emma Reynolds), the Pensions Minister. This will include a review of the local government pension scheme, the seventh largest pension fund in the world, to ensure it is getting the best value from the savings of nearly 7 million public sector workers, the majority of whom are women and the majority of whom are low-paid. They deserve a pension that is working for them. Together, these reforms will kick-start economic growth by unlocking investment that has been tied up for too long.
Kit Malthouse
Will the right hon. Lady give way?
Rachel Reeves
I have already given way to the right hon. Gentleman.
Madam Deputy Speaker (Dame Siobhain McDonagh)
Order. Could I just urge the House to think about interventions? There is a very long list of Members who want to speak and lots of people who want to make their maiden speech, and it would be great if they could all get in.
Rachel Reeves
Madam Deputy Speaker, you will be pleased to know that I will not apprise the House of every Bill that supports economic growth in the King’s Speech. Needless to say, there are many more—from the English devolution Bill to transfer power back into the hands of local communities to the employment rights Bill to make work pay, and the Great British Energy Bill to take back control of our country’s energy and create new jobs across the United Kingdom. Growing our economy flows through almost every word of this Address.
The British people put their trust in us on 4 July to fix the foundations of our economy, to rebuild Britain and to make every part of our great country better off. I do not take that trust for granted. We will not let people down, and I am ready to deliver the change that we need. I know it will take time and I know it will require hard work, but we are already getting on with the job by ending a reckless, chaotic approach to economic management, by putting politics back in the service of working people and by making economic growth our fundamental mission. I commend the Address to the House.
