Sir Keir Starmer will promise a “better bargain” for the British public in a major speech that will focus on the need for economic growth over spending.
The Labour leader will warn that his government would not be able to “turn on the spending taps” and will instead have to be “ruthless” when it comes to fiscal responsibility.
In a major speech hosted by the Resolution Foundation thinktank, Sir Keir will say the current state of the public finances will place “huge constraints” on what Labour can spend on public services.
“Growth will have to become Labour’s obsession if we are to turn around the economy,” he will say.
It follows a report by the thinktank which found that the UK has experienced 15 years of relative decline, with productivity growth at half the rate seen across other advanced economies, while wages have flatlined, costing the average worker £10,700 a year in lost pay growth.
The Resolution Foundation report also found that living standards of the lowest-income households in the UK are £4,300 lower than their French counterparts.
Starmer accused of ‘holding the Tory party’s pint’
Sir Keir will make his speech after an article he wrote in the Daily Telegraph generated controversy for its praise of former Tory prime minister Margaret Thatcher.
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The Labour leader said the late Baroness Thatcher brought about “meaningful change” in the UK as she “sought to drag Britain out of its stupor by setting loose our natural entrepreneurialism” during her 11 years in Downing Street.
The remarks have angered some MPs on the left of his party, with one telling Sky News they believed it meant Sir Keir “intends to govern without any real political project of his own”.
“It means meaningful or transformational change is well and truly off the table,” they added.
“He is in effect holding the Tory party’s pint, whilst they get themselves ready to run the country again.”
Sir Keir later sought to clarify his comments, telling the BBC his intention was to compare the “drift” of recent years with the “sense of mission” embodied by previous leaders – including Labour prime ministers Clement Attlee and Sir Tony Blair.
“It doesn’t mean I agree with what she [Thatcher] did, but I don’t think anybody could suggest she didn’t have a driving sense of purpose,” he explained.
Image: The then prime minister, Margaret Thatcher, in 1980
Economy ‘biggest issue’ at next election
Speaking to Sky News this morning, Labour’s national campaign coordinator, Pat McFadden, said the economy was going to be the “biggest issue” at the next election “because we’ve got taxes at a very high level”.
“We’ve had growth at a low level. We’ve had stagnating incomes. Public services are creaking. When you add it all up, it’s been a bad bargain for the British people,” he said.
Asked about his views on Baroness Thatcher, Mr McFadden said the word “admire” was “not the word I’d use”.
“I recognise she won [the general election] three times,” he said.
“I would hope if we were going to win elections, we would make change with the same determination but not in the same direction,” he added.
Pressed on what word he would use instead, Mr McFadden added: “She was successful electorally.”
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7:23
Shadow Cabinet Minister Pat McFadden defends Starmer’s comments about Thatcher
Starmer to follow Thatcher praise with Churchill reference
In his speech today, Sir Keir will argue that “Britain is going backwards” under Rishi Sunak’s leadership and that the “political consensus” that hard work will be rewarded has “become nothing short of a lie for millions of people” under the Conservatives.
“Taxes are higher than at any time since the war, none of which was true in 2010,” he will say.
And following his praise for Baroness Thatcher, Sir Keir will also put a twist on a famous quote from another Tory prime minister – Winston Churchill.
He is expected to say: “Never before has a British government asked its people to pay so much, for so little.”
“Inflation, debt, taxes; we face huge constraints,” he will add.
Sir Keir is also expected to say: “This parliament is on track to be the first in modern history where living standards in this country have actually contracted.
“Household income growth is down by 3.1% and Britain is worse off.”
Conservative Party chairman Richard Holden said in response: “The largest ‘constraint’ to growing the economy would be Labour’s £28bn a year borrowing plan, which independent economists warn would see inflation, interest rates and people’s taxes rise.
“It is the same old short-term approach from Labour – borrow more and the British people will pay more.”
The chancellor has confirmed she is considering “changes” to ISAs – and said there has been too much focus on “risk” in members of the public investing.
In her second annual Mansion House speech to the financial sector, Rachel Reeves said she recognised “differing views” over the popular tax-free savings accounts, in which savers can currently put up to £20,000 a year.
She was reportedly considering reducing the threshold to as low as £4,000 a year, in a bid to encourage people to put money into stocks and shares instead and boost the economy.
However the chancellor has shelved any immediate planned changes after fierce backlash from building societies and consumer groups.
In her speech to key industry figures on Tuesday evening, Ms Reeves said: “I will continue to consider further changes to ISAs, engaging widely over the coming months and recognising that despite the differing views on the right approach, we are united in wanting better outcomes for both savers and for the UK economy.”
She added: “For too long, we have presented investment in too negative a light, quick to warn people of the risks, without giving proper weight to the benefits.”
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6:36
Rachel Reeves’s fiscal dilemma
Ms Reeves’s speech, the first major one since the welfare bill climbdown two weeks ago, appeared to encourage regulators to focus less on risks and more on the benefits of investing in things like the stock market and government bonds (loans issued by states to raise funds with an interest rate paid in return).
She welcomed action by the financial regulator to review risk warning rules and the campaign to promote retail investment, which the Financial Conduct Authority (FCA) is launching next year.
“Our tangled system of financial advice and guidance has meant that people cannot get the right support to make decisions for themselves”, Ms Reeves told the event in London.
Last year, Ms Reeves said post-financial crash regulation had “gone too far” and set a course for cutting red tape.
On Tuesday, she said she would announce a package of City changes, including a new competitive framework for a part of the insurance industry and a regulatory regime for asset management.
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4:21
Reeves is ‘totally’ up for the job
In response to Ms Reeves’s address, shadow chancellor Sir Mel Stride said: “Rachel Reeves should have used her speech this evening to rule out massive tax rises on businesses and working people. The fact that she didn’t should send a shiver down the spine of taxpayers across the country.”
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The governor of the Bank of England, Andrew Bailey, also spoke at the Mansion House event and said Donald Trump’s taxes on US imports would slow the economy and trade imbalances should be addressed.
“Increasing tariffs creates the risk of fragmenting the world economy, and thereby reducing activity”, he said.
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