Reeves says Sunak’s decision to call early election shows he knows his economic plan not working
Reeves says Rishi Sunak claims that the eonomic problems facing the UK were caused by global economic shocks – Covid, and the energy price spike caused by the war in Ukraine.
But, she says, that is not correct, because the UK has been hit worse than comparable economies because of decisions taken by the Tories.
She says taxes have reached a 70-year high, national debt has more than doubled, and mortgages have gone up as a result of Liz Truss’s mini-budget.
If the UK economy had grown at the rate of the OECD average over the past 14 years, it would be £150bn larger, she says.
Rishi Sunak’s plan is not working, she says. And she says the clearest sign of that is his decision to call an early election.
Key events
Reeves is now taking question.
Q: [From Faisal Islam, the BBC’s economics editor] You won’t match the Tory triple lock plus policy. So, under you, pensioners could pay tax. Is that because you don’t think the Tory policy is a good idea, or is it because you don’t have the money? And will you have a budget before the summer?
Reeves says Labour is committed to the triple lock.
But, she says, the Tories have already promised unfunded tax cuts worth £64bn. And this one is an extra one, on top of that.
She says the money they are saying they would use to fund this they already earmarked for the national service plan.
Reeves says her watchwords will be stability, investment and reform. People will hear those words from her a lot, she says.
She sets out Labour plans, highlighting in particular the six first step proposals.
Labour will unlock potential, turn the page on chaos and decline, and start a new chapter for Britain, she says.
Reeves says every policy in the Labour manifesto will be fully costed and fully funded. She goes on:
No ifs, no ands, no buts. That is the attitude that I will take into the Treasury because taxpayers’ money should be spent with the same [discipline] which people spend their own money.
She says she recalls her mother sitting at the kitchen table going through bank statements and receipts when she was growing up. They were not badly off, but they did not have money spare, and every penny matters. She says that is the attitude she would take into the Treasury.
Reeves says she would lead ‘most pro-growth, pro-business Treasury’ UK has ever seen
Reeves says she worked in the private sector and in financial services before she became an MP. She goes on:
I want to lead the most pro-growth, the most pro- business Treasury that our country has ever seen, with a laser focus on delivering for working people.
Reeves says Sunak’s decision to call early election shows he knows his economic plan not working
Reeves says Rishi Sunak claims that the eonomic problems facing the UK were caused by global economic shocks – Covid, and the energy price spike caused by the war in Ukraine.
But, she says, that is not correct, because the UK has been hit worse than comparable economies because of decisions taken by the Tories.
She says taxes have reached a 70-year high, national debt has more than doubled, and mortgages have gone up as a result of Liz Truss’s mini-budget.
If the UK economy had grown at the rate of the OECD average over the past 14 years, it would be £150bn larger, she says.
Rishi Sunak’s plan is not working, she says. And she says the clearest sign of that is his decision to call an early election.
Rachel Reeves says Labour ‘natural party of British business’
Rachel Reeves, the shadow chancellor, is giving a speech on the economy in Derby.
She says her proposition is that Labour is “the natural party of British business”.
On the Today programme Jonathan Reynolds, the shadow business secretary, was asked if he was a socialist. The question was prompted by Keir Starmer telling the BBC yesterday that he was a socialist, but that he defined that as putting the country first (which is hardly the conventional definition of socialism).
Reynolds replied:
Yes, I would describe myself as a Christian socialist in the best traditions of that [term] because that’s about putting people first and to do that, you’ve got to have a set of policies that will deliver for people.
I think it’s the best tradition of the things that have been delivered in the UK, whether it’s the national parks or the NHS, have come from people with a similar background to mine.
Mel Stride dismisses significance of letter from business backing Labour, saying it lacks big names
Mel Stride, the work and pensions secretary, was flying the Tory flag on the morning interview round. Here are some of the main points he made.
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Stride dismissed the significance of the letter from business leaders backing Labour (see 9am), saying it lacked names from big companies. He told LBC:
I was very surprised when I saw that letter and skimmed over the names. And yes, there are some very good and very decent businesses there. There was a complete absence of any company, for example, from the FTSE 100, as far as I could tell.
The letter that we actually put together supporting our biggest tax cut for business in modern history – that’s the full expensing that the chancellor announced – actually had 200 names. That was back in November, and some really very big, very important businesses.
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He dismissed claims that the proposed £2.4bn “triple lock plus” tax cut for pensioners is not properly funded. The Tories say the money will come from savings from cutting down on tax avoidance and evasion. These claims always sound dubious, because the Treasury is supposed to be tackling tax avoidance and evasion anyway. But Stride dismissed objections. He told Times Radio:
We can comfortably raise £6bn from clamping down on tax avoidance and evasion and that figure, in fact, is very much in line with the kind of figures that we’ve achieved in the past and in fact the head of the National Audit Office has actually stated that that number is achievable and that is where the fully funded costing will be met.
The real debate we need and the one that’s being ducked is the challenge that the prime minister has quite rightly put to Keir Starmer to say, ‘Look, every week, let’s stand up in front of the British people and set out our stall and say what we stand for.’
This was very much an exercise in flogging a dead horse. Labour has made it clear that Starmer will debate Sunak, but probably only twice, and there seems to be no chance of weekly debates happening.
The Liberal Democrats have said the Tories cannot claim to be on the side of pensioners. Commenting on the “triple lock plus” announcement (see 8.34am), Sarah Olney, the Lib Dem Treasury spokesperson, said:
The sheer hypocrisy of the Conservatives to claim they are on the side of pensioners is laughable at best and dishonest at worst.
Our nation’s pensioners have been clobbered by stealth taxes, and failed on social care – these promises are empty.
Surge of Labour MPs standing down creates vacancies in safe seats being eyed up by Starmer allies
Jessica Elgot
Labour has opened applications for a string of new safe seats after half a dozen MPs announced last-minute retirements, with key allies of Keir Starmer expected to be lined up to take their place.
Those standing down include the former shadow minister Barbara Keeley, the chair of the parliamentary Labour party Jon Cryer, as well as John Spellar, Virendra Sharma and Kevin Brennan.
Julie Elliott, the MP for Sunderland Central, joined the ranks of those retiring on this morning. Senior Labour sources said they anticipate there could be several more departures announced in the next 24 hours.
The party is also advertising a number of other safe seats in London, including Stratford and Bow and West Ham and Beckton.
A number of senior Labour figures are widely expected to seek a seat in the coming days, including Josh Simons, the director of the highly influential pro-Starmer thinktank Labour First, and Georgia Gould, leader of Camden council.
Members of the party’s ruling national executive committee who have been instrumental in transforming its rules in the aftermath of Jeremy Corbyn’s leadership are also tipped for seats. Those include Luke Akehurst, Gurinder Singh Josan, Abdi Duale and the party’s national executive commitee’s chair James Asser.
The move will trigger controversy from critics who argue that Labour candidates – particularly those in plum seats – should be selected with local input from grassroots members, and not simply handed to allies of the leadership.
In February 2020, while he was campaigning for the Labour leadership, Starmer said that “the selections for Labour candidates needs to be more democratic and we should end NEC impositions of candidates. Local party members should select their candidates for every election.”
Starmer added then that “there should be no power without accountability, and true accountability requires transparency”.
Labour figures argue that special circumstances are triggered once an election is called and candidates must be quickly put in place.
Paul Johnson, director of the Institute for Fiscal Studies, told the Today programme that the “triple lock plus” tax cut for pensioners proposed by the Tories today was the latest example of the party reversing a tax policy they implemented themselves. He told the Today programme:
Pensioners used to have a bigger personal allowance than people of working age – it was the Conservatives who got rid of it.
So this is one of many examples actually of tax policy that has been reversed by the same Government. George Osborne got rid of it in the 2010s when the personal allowance of people under pension age continued to rise.
So one of the consequences of that, actually, is that the point at which pensioners currently start to pay tax is below where it was in 2010, whereas the point at which the rest of us start to pay tax is well above where it was in 2010.
Secondly, it’s worth saying that in part, looking forward, this is simply a reversal of a tax increase that the Conservatives proposed. The idea is that the allowance doesn’t rise at all in line with inflation for the next three years. So half of the cost of this is simply not imposing the tax increase that was previously proposed.
Other example of Tory tax policy U-turns since 2010 would include George Osborne raising the value of the personal tax allowance, and then Rishi Sunak and Jeremy Hunt freezing the allowance, dragging more people back into the tax bracket; and Osborne cutting corporation tax considerably, only for Sunak to put it up again.
120 business leaders sign lettter backing Labour, saying it will ‘partner fiscal discipline with growth strategy’
To coincide with the Rachel Reeves speech, 120 business leaders have signed a letter published in the Times backing Labour. The paper has splashed on the news.
In his story, Steven Swinford says:
The signatories, who include senior figures from the City, entrepreneurs, investors, high-profile figures from the world of technology and leading retailers, say change is needed “to achieve the UK’s full economic potential”.
The letter is signed by past and present executives from JP Morgan, Heathrow, Aston Martin, JD Sports, Iceland and the advertising giant WPP. Sir Jimmy Wales, the founder of Wikipedia, and Tom Kerridge, the restaurateur, have also signed the letter, along with the founder of a childcare company in which the prime minister’s wife previously held shares.
It represents the culmination of years intense lobbying by Rachel Reeves, the shadow chancellor, and Sir Keir Starmer, the Labour leader, as they seek to position Labour as the party of business before the general election.
In their letter, the business leaders indicate that they are backing Labour not because of any specific policy pledge, but because Keir Starmer and Rachel Reeves are offering stablity. They say for too long the economy has been “beset by instability, stagnation and a lack of long-term focus”. They say they are backing Labour because it will “partner fiscal discipline with a long-term growth strategy, working in partnership with the private sector”.
Here is the text of the letter in full.
We, as leaders and investors in British business, believe it is time for a change. For too long, our economy has been beset by instability, stagnation and a lack of long-term focus.
The UK has the potential to be one of the strongest economies in the world. A lack of political stability and the absence of consistent economic strategy have held it back. The country has been denied the skills and infrastructure it needs to flourish.
We are looking for a government that will partner fiscal discipline with a long-term growth strategy, working in partnership with the private sector to drive innovation and investment to build digital and physical capital and fix our skills system. This is the only way to put us on track for sustained productivity growth.
Labour has shown it has changed and wants to work with business to achieve the UK’s full economic potential. We should now give it the chance to change the country and lead Britain into the future. We are in urgent need of a new outlook to break free from the stagnation of the past decade and we hope by taking this public stand we might persuade others of that need too.
Rachel Reeves will vow to lead most ‘pro-growth’ Treasury in UK history
Rachel Reeves will this morning give a speech pledging to lead the most “pro-growth” Treasury in UK history if Labour wins the general election, Anna Isaac reports.
Here is my colleague Gaby Hinsliff’s take on the latest election offer for pensioners.
UK politics will offer ageing boomers literally anything EXCEPT a functioning NHS and properly funded social care, ie the things that actually keep them alive. https://t.co/5PrdhFiZ1G
— gabyhinsliff (@gabyhinsliff) May 27, 2024
UK politics will offer ageing boomers literally anything EXCEPT a functioning NHS and properly funded social care, ie the things that actually keep them alive.
Tories’ ‘triple lock plus’ planned tax cut for pensioners a ‘desperate move’ says Labour
Good morning. Earlier this month Rishi Sunak had a difficult encounter with Janet Street-Porter on Loose Women when she claimed the Tories hated pensioners. Her argument was based on the fact that pensioners would not benefit from the national insurance cut in the budget (because pensioners don’t pay national insurance), and it totally ignored the fact that overall pensioners have gained considerably since the Tories have been in power because of the triple lock, but viewers may have concluded that pensioners had a legitimate grievance against the Conservatives.
Today, in their second big policy announcement of the election campaign, the Tories have announced plans for a £2.4bn tax cut for pensioners intended to win back the Street-Porter vote. Pensioners will get a personal tax allowance that will always rise in line with the triple lock, so that the allowance will always be higher than the state pension. This is how the Conservative party explains it in their news release.
Having cut tax for working people by reducing national insurance from 12% to 8%, the Conservatives will now cut tax for pensioners. Today, the Conservatives announced that from April they will increase the personal allowance for pensioners in line with the triple lock by introducing a new age-related allowance.
That means that for pensioners, both the state pension and their tax-free allowance will always rise in line with the highest of earnings, wages or 2.5%: the new triple lock plus.
This is a tax cut of around £100 for 8 million pensioners next year, which will only grow over time – expected to be almost £300 a year by the end of the parliament. It comes alongside the Conservatives’ existing commitment to the triple lock, which on current forecasts will see the state pension rise by £430 next April – and by around £1,700 a year by the end of the parliament.
The landmark announcement will guarantee in legislation that the pensioners’ personal allowance will always be higher than the level of the new state pension.
The policy will cost £2.4bn a year by 29/30 and be funded through the Conservatives’ previously announced plan to raise an extra £6bn a year by the end of the next parliament by clamping down on tax avoidance and evasion.
In a comment on the plan, Sunak says:
This bold action demonstrates we are on the side of pensioners. The alternative is Labour dragging everyone in receipt of the full state pension into income tax for the first time in history.
The Daily Telegraph and the Daily Express have splashed on the story approvingly.
But Labour has described the plan as a “desperate move” and revived its claim that the Tory proposal to get rid of national insurance over the long term would mean pensions would have to be cut. The Tories claim this is a false smear.
Jonathan Ashworth, the shadow Cabinet Office minister, said:
Why would anyone believe the Tories and Rishi Sunak on tax after they left the country with the highest tax burden in 70 years?
This is just another desperate move from a chaotic Tory party torching any remaining facade of its claims to economic credibility.
Not only have they promised to spend tens of billions of pounds since this campaign began, they also have a completely unfunded £46bn policy to scrap national insurance that threatens the very basis of the state pension.
Commenting on the plan on X, Paul Johnson, director of the Institute for Fiscal Studies thinktank, said that the Tories were, in practice, reinstating a special tax allowance for pensioners that they themselves scrapped, under George Osborne, and that half the saving pensioners would get was just the result of their not having to pay a tax increase already in the pipeline.
About half the cost of this is just not imposing the planned tax increase (via 3 more years of freezing allowances) on pensioners. So the £100 “saving” next year is mostly just avoiding a £100 tax increase, rather than an actual giveaway. https://t.co/KfwhQvZLgV
— Paul Johnson (@PJTheEconomist) May 27, 2024
About half the cost of this is just not imposing the planned tax increase (via 3 more years of freezing allowances) on pensioners. So the £100 “saving” next year is mostly just avoiding a £100 tax increase, rather than an actual giveaway.
NB it was George Osborne who got rid of the higher tax allowance for pensioners. Now want to bring it back. But at a lower level than it was in 2010. Like corporation tax, pension lifetime allowance, personal allowance, another example of total lack of consistency in tax policy
Here is the agenda for the day.
10am: Rachel Reeves, the shadow chancellor, gives a speech in the East Midlands, followed by a Q&A with journalists.
10am: Nigel Farage, the Reform UK honorary president, is campaigning in Dover.
10.10am: Ed Davey, the Lib Dem leader, does a campaign visit with Tim Farron at Windermere.
10.30am: Douglas Ross, the Scottish Tory leader, launches the Scottish Tory election campaign in Perth.
10.30am: Anas Sarwar, the Scottish Labour leader, is on a visit in East Renfrewshire.
11am: Rishi Sunak is taking part in a Q&A with workers in Staffordshire.
Afternoon: Keir Starmer takes part in a Q&A with workers
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