Rachel Reeves responds to the Autumn Statement
Today, the Chancellor has lifted the lid on thirteen years of economic failure.
We were told to expect an Autumn Statement for growth.
But the economy is now forecast to be £40bn smaller by 2027 than the Chancellor said back in March.
Growth revised down next year, the year after, and the year after that too.
The Chancellor claims the economy has ‘turned a corner’, yet the truth is that under the Conservatives growth has hit a dead end.
What has been laid bare today is the full scale of the damage that this government has done to our economy over thirteen years.
And nothing that has been announced today will remotely compensate.
Taxes eating into wages.
Inflation high, with prices still going up in the shops.
Public services on their knees.
And too many families barely managing to make ends meet.
As the sun begins to set on this divided, out of touch, weak government, the only conclusion the British people will reach is this:
After thirteen years of the Conservatives, the economy simply isn’t working.
And, despite all the promises today, working people are still worse off.
The centrepiece of today’s Autumn Statement is a cut in the headline rate of National Insurance.
I’m old enough to remember when the Prime Minister wanted to put up National Insurance.
As recently as January last year he said:
“We must go ahead with the health and care levy. It is progressive, in the sense that the burden falls most on those who can most afford it.”
It was a tax on working people and we opposed it for that very reason.
Yet again, this Prime Minister is left arguing against himself.
In response to last year’s Autumn Statement I warned that the government was pickpocketing working people through stealth taxes.
I have long argued that taxes on working people are too high.
Indeed, I said in my conference speech that I want them to be lower.
From their failure to uprate income tax or national insurance bands, to forcing councils to raise council tax, the Conservatives have pushed the costs of their failure onto others.
But the British public won’t be taken for fools.
They know that what has been announced today owes more to the cynicism of a party desperate to cling onto power than the than the real priorities of this high tax, low growth Conservative government.
So I think we can forgive taxpayers for not celebrating when they see the truth behind today’s announcements.
Going into this statement, the government had already put in place tax increases worth the equivalent of a 10p increase on National Insurance, so today’s 2p cut will not remotely compensate for the tax increases already put in place by this Conservative government.
The fact is that taxes will be higher at the next election than they were the at the last.
This is the legacy of the Conservatives.
And that is their record.
The Chancellor and Prime Minister have spent the last two weeks marching their MPs up a hill on inheritance tax, only today to march them down again.
Let’s not forget that when they realised they had money to spend, this government’s first instinct was to give a tax cut to millionaires.
But in the end, even they realised they couldn’t get away with it in the middle of a cost of living crisis.
So, can the Chancellor tell the House today: is cutting inheritance tax a decision delayed or a decision abandoned?
This Autumn Statement for growth is now the 11th Conservative economic growth plan,
from the 5th Prime Minister, the 7th Chancellor, and the 9th Business Secretary.
And what do those numbers add up to?
According to the most recent GDP data, a big fat zero.
That’s zero growth in the third quarter of this year.
Now the Chancellor mentioned some countries that we are outperforming on growth.
But I couldn’t help but notice he failed to mention any of the many advanced economies that have grown faster than the UK.
Over the thirteen years of this low growth Conservative government, the UK languishes in the bottom third of OECD countries.
There are 27 OECD economies that have grown faster than us in the thirteen years since 2010, including: the US, Australia, Canada, Sweden, Slovenia, and 22 others.
In fact, over the next two years, no fewer than 177 countries are forecast by the IMF to grow faster than the UK.
And next year, we are forecast to be the slowest growing economy in the whole of the G7.
When it comes to economic growth under the Tories we are more world-following than world-beating.
And let’s look at how their record on growth compares to Labour’s record on growth.
Under the Conservatives, GDP has grown an average of 1.5% a year.
But with Labour, it grew an average of 2% a year in the thirteen years we were in office.
Had the economy continued to grow at the rate it did with Labour, it would now be £150 billion bigger.
So, what is this government’s economic record?
Lower growth, and higher borrowing.
With debt more than doubling, now at almost 100% of GDP.
This is a product of their failures over thirteen years.
A Tory government that has failed on growth. Failed on debt. Failed on levelling up. And failed on the cost of living too.
And now they expect the British people to believe them when they say they’re going to turn it all around, when it is them who are the problem, not the solution.
If we’re going to grow the economy, we must get more people into work.
Let me be clear – people who can work, should work.
That’s why we’ve long argued that the Work Capability Assessment needs replacing, because right now it is discouraging people from seeking work.
But there’s a wider problem that yet again this government are failing to face up to.
Britain is the only country in the G7 where the employment rate has still has not returned to pre-pandemic levels, with the increase in the number of people out of the workforce due to long term health issues costing the taxpayer a staggering £15.7 billion a year.
NHS waiting lists have swelled to 7.8 million, and 2.6 million people are out of work due to long term sickness.
A healthy nation is critical to a healthy economy.
That’s why Labour has pledged to cut hospital waiting lists, investing an extra £1.1 billion a year to deliver two million more appointments, scans and operations.
It will be funded by abolishing the non-dom tax status replacing it with a modern scheme for people who are genuinely living in the UK for short periods.
But once again we see today that this policy has been vetoed by the Prime Minister.
The best way to get people back to work is to get our NHS working.
But the reality is you can never trust the Tories with our NHS.
The Chancellor has made a great fanfare about public sector efficiency and value for money.
This is from a government that has blown £140 million on a discredited Rwanda scheme, and yet are not able to fly a single asylum seeker there.
£7.2 billion of public money lost on fraud during the pandemic.
£8.7 billion on PPE that’s been written off.
HS2 costing £57 billion with not a single piece of track going north of Birmingham.
No one can trust the Tories with taxpayers’ money.
It says it all that after thirteen years of Tory government there are still nearly 12,000 NHS computers running on outdated software that’s vulnerable to cyber-attacks.
Ten years ago, when Health Secretary, the Chancellor promised a paperless NHS by 2018. Yet today, in 2023, 26 NHS trusts are still using 600 fax machines.
Why on earth should people who experience deteriorating public services under this Conservative government trust them to fix it when his six years as Health Secretary makes him one of the biggest architects of failure.
“If you put your hands into people’s pockets and take money out of them and they don’t see visible improvements in the service they receive they get very angry indeed.”
Not my words. The Chancellor’s words just two years ago.
And I agree with him.
The Tories have had thirteen years to improve public services, and they have failed.
This is too little, too late.
I do want to welcome today the Chancellor’s announcement of additional funding to organisations like the Holocaust Education Trust to tackle anti-semitism and keep our communities safe.
There is no place for hate in our society, and I know that we will work together across the house to eliminate it.
The Chancellor calls this an Autumn Statement for growth.
But it is Labour who have set the agenda on growth.
And today we see the Conservatives have released their own poor cover version of what we have already announced.
The Chancellor is talking today about unlocking capital by reforming pensions.
But Labour would go further, encouraging investment into British start up and scale up firms, and introducing measures to ensure the consolidation of pension funds so that our pension system gets better returns for British pensioners and for the UK economy.
On planning, the Conservatives are following Labour’s lead on providing money off bills for communities that host grid infrastructure and speeding up planning decisions.
What’s taken them so long?
Labour will get Britain building again with a once in a generation set of reforms to accelerate the building of our country’s critical infrastructure and to build housing too.
We will fast-track battery factories, our life sciences, and 5G technology to grow our economy and provide good jobs in every part of our country.
We welcome the fact that the Chancellor has announced permanent full expensing – another thing we’ve been calling for.
But that doesn’t make up for the years of uncertainty that businesses have faced with taxes going up and down like a yo-yo.
With small and medium businesses, who play such a pivotal role in growing our economy, left exposed to the Tories’ economic volatility.
Labour’s partnership with business will get our economy firing on all cylinders.
That’s why this week we established a new British Infrastructure Council with key investors in the UK economy, focussed on unlocking private investment by addressing the delivery challenges businesses face when investing in Britain.
Through Labour’s new National Wealth Fund, we will work alongside the private sector to back the growth of British industries so that we make that crucial transition to a lower carbon economy.
And for every pound of public investment, we will leverage in three times as much private investment, while also getting a return for the taxpayer.
Labour’s plan will boost our economy, get debt falling, and make working people better off.
If you listen to the benches opposite, you’d think the cost of living crisis was behind us.
But inflation is still double the Bank of England’s target rate.
And I know the importance of low and stable inflation from my time as an economist at the Bank of England.
Now, it is of course welcome that the Chancellor has accepted this year’s recommendation of the Low Pay Commission on the minimum wage.
But the reality of the Conservatives’ record is that average wages for working people have been held back.
Under this government real average weekly wages have increased by just 3% in the last 13 years compared to a 27% increase under Labour – worth an additional £120 more per week for someone going out to work every day.
And today is Equal Pay Day, so it is important to recognise that the living standards of working women have also been held back by a gender pay gap that I am determined to close.
The Chancellor and the Prime Minister might say that the cost of living crisis is done with.
Now, everything might look ok 10,000 ft up in a helicopter, but down here on planet earth people are approaching Christmas and the year ahead with worry.
The cost of living crisis has hit us harder because Tory mismanagement has left us so exposed.
11 million UK households don’t have enough savings to cover three weeks of living expenses if they needed it.
Working families have been skating on thin ice for too long. As their resilience has been eroded, so has our national economy’s.
Let’s not forget, it is this government that oversaw the closure of our critical gas storage which left our country more exposed to the huge fluctuations of the international energy markets.
While the former Prime Minister – that’s four Prime Minister’s ago now – cut energy efficiency programmes, leading to higher bills for homeowners.
And just last year we saw the true cost of the Conservatives when their kamikaze Budget crashed the economy – leading to market turmoil, pensions put in peril, and a spike in interest rates.
1.6m families will see their mortgage deals end this year. Those re-mortgaging since July have seen their mortgage payments rocket by an average of £220 every month. And next year, 1.5m families will face a similar fate.
The Conservative economic recklessness inflicted a Tory mortgage penalty on families across the country.
In Wellingborough, families with a mortgage would be expected to find an additional £190 more per month.
In Richmond, North Yorkshire, homeowners face £200 more in monthly mortgage costs.
In the Chancellor’s own constituency, families with a mortgage will see an average increase of £420 a month because of Conservative economic failure.
And with increased costs for landlords, renters are paying a high price too.
Working people just don’t have that sort of money lying around.
But that is what we’ve come to after thirteen years of Conservative government.
And this is the record upon which people will judge the Conservatives at the next election.
This Tory economic recklessness is not a thing of the past.
The British people are still paying the price.
And we say never again.
Last week Labour put forward an amendment to the King’s Speech to put our fiscal lock into law.
It would prevent a repeat of last year’s economic horror show.
And yet the Tories voted against it.
It is clear that today, Labour is the party of economic and fiscal responsibility.
And what have the Conservatives learnt?
The country is crying out for change.
This decaying government can change its personnel, but they have failed to change the direction of our country.
In thirteen years we have had seven Chancellors.
You wouldn’t run a business like this, and you can’t run a country like this either.
And the Prime Minister cannot even promise that this Chancellor will be in post at the next election.
We have all heard the reports.
When they were first came together it was the fairy tale marriage.
But, one year on the relationship has hit the rocks.
The pair have grown apart.
With rumours running rife that the prime minister has already got his eyes on someone else.
But whoever this Prime Minister chooses as Chancellor, the truth is this: Britain is – and will be – worse off under the Conservatives.
They have held back growth, crashed our economy, increased debt, trashed our public services, left businesses out in the cold, and made life harder for working people.
Our country cannot afford five more years of the Conservatives.
The ravens are leaving the Tower when even Saatchi and Saatchi declare that the Tories are not working.
The questions people will be asking at the next election and after today’s Autumn Statement are these:
Do me and my family feel better off than when the Conservatives came to office thirteen years ago?
Do our hospitals, our schools and our police work better than they did thirteen years ago?
In fact, does anything in Britain working better today than when they came into office thirteen years ago?
We all know working people are worse off under the Conservatives:
With growth down
And their time is up.
It is time for change.
A changed Labour party, to lead Britain and to make working people better off.