By Alistair Smout, Andrew MacAskill and Elizabeth Piper

Reeves Rules Out Austerity at Labour Conference

LIVERPOOL, England (Reuters) – British finance minister Rachel Reeves ruled out a return to economic austerity on Monday, aiming to shift the gloomy tone her party adopted since its landslide election victory in July.

Labour has consistently communicated to Britons that the departing Conservatives, who implemented a radical cutback program following the 2008 financial crisis, left a significant gap in public finances, suggesting tax increases and spending cuts could be on the horizon.

However, at the party’s annual conference, Reeves described a hopeful vision for Britain resulting from investments in manufacturing and services, where work offers decent wages and future generations can prosper.

Despite this hopeful outlook, she provided no specific timeline for achieving the growth and new jobs she envisioned. Reeves reiterated that difficult choices would continue, including her controversial decision to cut winter fuel payments for pensioners.

Speaking to a crowded conference hall in Liverpool, Reeves declared: “There will be no return to austerity. Conservative austerity was a destructive choice for our public services – and for investment and growth too.”

“We must address the Tory (Conservative) legacy, which will require tough decisions, but we won’t allow that to overshadow our ambitions for Britain.”

Reeves justified the cuts in fuel payments by citing the previous government’s failures, including a £22 billion ($29 billion) deficit in public finances.

She stated, “I know that not everyone in this hall or in the country will agree with every decision that I make. I will not shy away from those decisions: not for political expediency, not for personal advantage,” emphasizing that these hard choices are necessary for fiscal stability.

Reeves also expressed unwavering optimism for Britain, stating, “My ambition knows no limits because I can see the prize on offer if we make the right choices now,” as she announced the launch of free breakfast clubs for primary school children.

She underscored the potential growth from increased public investment, urging the Treasury (finance ministry) to focus on the positive outcomes of investments rather than solely on their costs.

Previously, Reeves has pledged to exclude public investment from annual budget deficit calculations while promising to adhere to rules that ensure public debt remains on a downward trajectory, which limits her flexibility.

LIFTING MOOD

Her more optimistic stance seemed designed to enhance the government’s morale at a time of criticism regarding why ministers accepted donations for clothes. A recent survey indicated a steep decline in consumer confidence, triggering accusations that Reeves and Prime Minister Keir Starmer might be harming the economy with their pessimistic outlook.

Business leaders generally welcomed her speech and the emphasis on a long-term industrial strategy, with Stephen Phipson, CEO of Make UK, stating, “It is a vital piece in the jigsaw of future economic growth.”

Critics, however, like Danny Sriskandarajah, CEO of the New Economics Foundation think tank, argued that Reeves provided insufficient details on how the government would reform an unjust economic system.

Reeves dedicated much of her address to criticizing the former Conservative government for its mishandling of the economy, particularly referencing the uncosted budget of former Prime Minister Liz Truss that caused market turmoil two years prior.

She reiterated that refraining from austerity would allow for growth in overall public spending under Labour, despite the necessity of some tough choices.

In a sign of forthcoming challenges, nurses in the English National Health Service voted on Monday to reject a government pay award for 2024/25.

With government debt at historic highs, Reeves pledged to recover funds by appointing a COVID corruption commissioner to investigate over £650 million in pandemic contracts, some of which she noted were awarded to friends and donors of the Conservative Party.

“We want that money back,” she declared to applause.