Sir Keir Starmer to warn economy in perilous state as he vows to ‘fix the foundations’
Sir Keir Starmer will vow on Tuesday to “reverse a decade of decline” and to “fix the foundations” of the UK economy.
Delivering a much-trailed speech in the gardens of Downing Street ahead of parliament’s return next week, the prime minister will acknowledge the state of the public finances but pledge to “do the hard work needed to root out 14 years of rot” as he continues to place the blame on the former Conservative government.
And he will insist his administration will not continue with “business as usual” now Labour are in power, instead saying there will be “no more politics of performance, papering over the cracks, or division and distraction”.
But Conservative Party chairman Richard Fuller said it would be “nothing but a performative speech to distract the public from the promises Starmer made that he never had any intention of keeping”.
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Starmer is set to give a gloomy warning, explains Sky News’ Darren McCaffrey
Since taking office almost eight weeks ago, the government has been reiterating its claim it has been left with a £22bn “black hole” in the Treasury by the Tories, with even reserve funds of £9bn having been spent “more than three times over”.
And while growth has been better than expected in recent months, public borrowing is at a record high and inflation crept up again in August.
The government has already announced it will seek to claw back some of the deficit via a controversial decision to end winter fuel payments to all pensioners who do not receive pension credit, as well as delaying social care reforms and demanding all departments find savings worth an estimated £3bn.
However, ministers have also signed off on large-scale pay deals with both junior doctors and train drivers, and promised investment into its priorities, including a new border security command and the hiring of new teachers.
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Speculation is rife that Chancellor Rachel Reeves will increase taxes when she delivers her budget in October, despite Labour’s election pledge not to hike levies on “working people”.
But it is not yet clear who will be targeted to raise the funds needed, and the government insists it will continue to focus on growing the economy.
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Chancellor’s cuts to public finances explained
Giving his speech to around 50 people he met on the campaign trail, the prime minister will say: “When I stood on the steps of Downing Street two months ago, I promised this government would serve people like you… those serving the community and the country every day.
“I promised that we would get a grip on the problems we face, and that we would be judged by our actions, not by our words.”
He will add: “We will do the hard work needed to root out 14 years of rot and reverse a decade of decline.
“We’ll fix the foundations, protecting taxpayers’ money and people’s living standards. We’ll reform our planning system to build the new homes we need. We’ll level up workers’ rights so people have security, dignity and respect.
“We’ll strengthen our border security. We’ll crack down on crime. We’ll transform public transport. And we’ll give our children the opportunities they need to succeed.”
Sir Keir will say his government “won’t always be perfect”, but working people would “be at the heart” of what it does, adding: “That’s why I wanted to invite you here today. To show that the decent, hard-working people who make up the backbone of this country belong here and that this government is for you.
“A garden and a building that were once used for lockdown-breaking parties, are now back in your service.”
The prime minister is also expected to discuss what he calls a “societal black hole” he believes was left by the Tories too, as he promises to be “honest with people about the choices we face”.
Commenting on the riots that plagued the summer, Sir Keir will say: “The riots didn’t just betray the sickness, they revealed the cure, found not in the cynical conflict of populism but in the coming together of a country the morning after and cleared up their community.
“Because that is who we are, that is what we stand for. People who cared for their neighbour. Communities who stood fast against hatred and division. Emergency services who did their duty – even when they were in danger. And a government that put the people of this country first.”
Business
Chancellor’s Mansion House speech vows to rip up red tape – saying post-financial crash rules went ‘too far’
Chancellor Rachel Reeves has criticised post-financial crash regulation, saying it has “gone too far” – setting a course for cutting red tape in her first speech to Britain’s most important gathering of financiers and business leaders.
Increased rules on lenders that followed the 2008 crisis have had “unintended consequences”, Ms Reeves will say in her Mansion House address to industry and the City of London’s lord mayor.
“The UK has been regulating for risk, but not regulating for growth,” she will say.
It cannot be taken for granted that the UK will remain a global financial centre, she is expected to add.
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It’s anticipated Ms Reeves will on Thursday announce “growth-focused remits” for financial regulators and next year publish the first strategy for financial services growth and competitiveness.
Rachel Reeves
Bank governor to point out ‘consequences’ of Brexit
Also at the Mansion House dinner the governor of the Bank of England Andrew Bailey will say the UK economy is bigger than we think because we’re not measuring it properly.
A new measure to be used by the Office for National Statistics (ONS) – which will include the value of data – will probably be “worth a per cent or two on GDP”. GDP is a key way of tracking economic growth and counts the value of everything produced.
Brexit has reduced the level of goods coming into the UK, Mr Bailey will also say, and the government must be alert to and welcome opportunities to rebuild relations.
Mr Bailey will caveat he takes no position on “Brexit per se” but does have to point out its consequences.
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Bailey: Inflation expected to rise
In what appears to be a reference to the debate around UK immigration policy, Mr Bailey will also say the UK’s ageing population means there are fewer workers, which should be included in the discussion.
The greying labour force “makes the productivity and investment issue all the more important”.
“I will also say this: when we think about broad policy on labour supply, the economic arguments must feature in the debate,” he’s due to add.
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The exact numbers of people at work are unknown in part due to fewer people answering the phone when the ONS call.
Mr Bailey described this as “a substantial problem”.
He will say: “I do struggle to explain when my fellow [central bank] governors ask me why the British are particularly bad at this. The Bank, alongside other users, including the Treasury, continue to engage with the ONS on efforts to tackle these problems and improve the quality of UK labour market data.”
Business
Reeves has welcome support from Bank’s governor as she goes for growth and seeks to woo City
When Gordon Brown delivered his first Mansion House speech as chancellor he caused a stir by doing so in a lounge suit, rather than the white tie and tails demanded by convention.
Some 27 years later Rachel Reeves is the first chancellor who would have not drawn a second glance had they addressed the City establishment in a dress.
As the first woman in the 800-year history of her office, Ms Reeves’s tenure will be littered with reminders of her significance, but few will be as symbolic as a dinner that is a fixture of the financial calendar.
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Her host at Mansion House, asset manager Alastair King, is the 694th man out of 696 Lord Mayors of London. The other guest speaker, Bank of England governor Andrew Bailey, leads an institution that is yet to be entrusted to a woman.
Ms Reeves’s speech indicates she wants to lean away from convention in policy as well as in person.
By committing to tilting financial regulation in favour of growth rather than risk aversion, she is going against the grain of the post-financial crash environment.
“This sector is the crown jewel in our economy,” she will tell her audience – many of whom will have been central players in the 2007-08 collapse.
Sending a message that they will be less tightly bound in future is not natural territory for a Labour chancellor.
Her motivation may be more practical than political. A tax-and-spend budget that hit business harder than forewarned has put her economic program on notice and she badly needs the growth elements to deliver.
Rachel Reeves on budget day. Pic: PA
Her plans to consolidate local authority pension schemes so they might match the investing power of their Canadian and Australian counterparts is part of the same theme.
Infrastructure investment is central to Reeves’s plan and these steps, universally welcomed, could unlock the private sector funding required to make it happen.
Bank governor frank on Brexit and growth
If the jury is out in a business financial community absorbing £25bn in tax rises, she has welcome support from Mr Bailey.
He is expected to deliver some home truths about the economic inheritance in plainer language than central bankers sometimes manage.
Britain’s growth potential, he says, “is not a good story”. He describes the labour market as “running against us” in the face of an ageing population.
With investment levels “particularly weak by G7 standards”, he will thank the chancellor for the pension reforms intended to unlock capital investment.
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Governor warns inflation expected to rise
He is frank about Brexit too, more so than the chancellor has dared.
While studiously offering no view on the central issue, Mr Bailey says leaving the EU had slowed the UK’s potential for growth, and that the government should “welcome opportunities to rebuild relations”.
There is a more coded warning too about the risks of protectionism, which is perhaps more likely with Donald Trump in the White House.
“Amid threats to economic security, let’s please remember the importance of openness,” the Bank governor will say.
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All that is welcome for Ms Reeves.
Already a groundbreaking chancellor, she is aiming for a political and economic legacy that extends beyond her gender and the dress code.
Water company United Utilities has reported hundreds of millions in profit as it seeks to further increase customer bills.
The utility serving seven million customers in the northwest of England recorded £335.7m in underlying operating profits for the first half of this year, up nearly 23% from £271.1m a year ago.
It comes as the firm has requested bills rise 32% to make them among the most expensive in England and Wales.
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The proposed average annual bill would increase to £584 by 2030 from the £443 typical yearly charge in the 2023/2024 financial year. Since April 2023 bills have been upped 6.4% and then 7.9%.
Bills hikes were behind the rise in revenue to more than £1.08bn from £975.4m in 2023.
Other ways of assessing profit were lower than the underlying operating sum. Profit before tax reached £140.6m while after tax profit topped £103.1m for the six months to the end of September 2024, both lower than a year earlier.
Boss’s pay
Bonus and benefits payments worth £1.416m were paid to two executives on top of £1.128m in base pay, according to analysis of company filings done by the Liberal Democrats.
It’s down compared with 2022/2023 when three executives were given £1.6m in base pay and £2.456m in bonuses and benefits.
Read more:
Water giant United Utilities strikes £1.8bn pension deal
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The environment
In a year of record sewage outflows into waterways the company was one of just three firms that met the Environment Agency’s top four-star performance ranking.
United Utilities in July came under investigation by water regulator Ofwat for not meeting its obligation to minimise pollution.
In response the company said at the time: “We understand and share people’s concerns about the health of the environment and the operation of wastewater systems, including combined sewer overflows.”
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