At a Glance
A challenging backdrop 81 days after Labour won a landslide General Election victory, it might seem premature to say that the Government needed a reset.
Nonetheless, it would be accurate to say that the Government needed to draw a line under the scandals and internal party rows which have engulfed it in recent weeks.
Striking an optimistic and upbeat tone, that is exactly what the Chancellor sought to do this afternoon whilst outlining what she referred to as repairing the damage of 14 years of Conservative rule and the principles which will underpin the upcoming Budget.
Changing the Labour Party
At the start of her speech, Reeves asked why it was that the British people had put their trust in Labour for the first time in five General Elections. The answer she gave can be summarized in two words: economic responsibility.
She argued that this transformation was not the result of a single line in the manifesto, but rather thanks to the efforts the Labour Party have taken since 2019 to prove that they can once again be trusted with the country’s finances.
This was presented in stark contrast to the Conservatives who had “crashed the economy” with their mini budget. Reeves argued that it was because of this legacy that the road ahead is steeper and harder than they had predicted before the General Election.
It was in this context that the Chancellor addressed her decision to means-test the Winter Fuel Payment for pensioners. Addressing the disquiet about the decision, particularly following last month’s comments from the Prime Minister that those with the broadest shoulders “should bear the heavier burden,” Reeves conceded that not everyone in the hall or in the country agreed with her decision. However, she argued that this decision alongside efforts to protect the triple lock, was the right course of action for the country.
Reeves added that fixing the foundations would involve a series of difficult decisions, but as Chancellor, she would not duck them.
Changing the country
Striking a more optimistic tone, and perhaps in response to some accusations of Labour “talking down” the country, Reeves argued that whilst the Government must deal with the legacy of 14 years of Conservative rule, doing so will not dim her ambition for Britain. She added that her upcoming Budget would have “real ambition.”
Much to the joy of the audience, Reeves stated that there would be no return to austerity and that the Budget would instead be focused on fixing the foundations and encouraging investment.
Adding to this, Reeves stated her belief that to deliver sustained economic growth, you need stability, but stability alone is not enough. She argued that the country needs an active government willing to intervene and a Treasury which moves on from “just counting the cost of investment to recognizing the benefits too.” It would seem that the era of “Treasury Brain” and “Treasury orthodoxy” is coming to an end. There is widespread speculation that fiscal rules are going to be changed to ease the restrictions on government borrowing for public sector investment.
Reeves confirmed that the much-anticipated plans for the new industrial strategy for Britain would be published in October, which she argued will drive growth in our manufacturing and services sectors, break down barriers for regional growth and speed up the transition to net zero. The green paper will be followed by the publication of a final strategy in the Spring following consultation with business.
Reeves also championed Labour’s efforts to “Make Work Pay” by banning exploitative zero-hour contracts, ending fire and rehire and introducing a minimum wage which takes into account the real cost of living. This follows recent reports that the new Government is set to agree on a probation period of up to six months for new employees after extensive negotiations about the proposed ‘day-one rights’ for all workers.
This sentiment was echoed towards the end of the speech where Reeves declared herself proud to be the first occupant of Number 11 in 14 years to have delivered “a meaningful, real pay rise to millions of public sector workers.”
Businesses would also have heard the Chancellor mention business rates reform several times in her speech, but didn’t go further than echoing the manifesto commitment to level the playing field between the high street and online retailers.
Conclusion
This was by far the most optimistic tone that the Chancellor has struck since being appointed in early July. Business leaders told EGA they welcomed the change in tone to a more positive forward-looking approach even if it has taken a long time to get here.
Attendees at the largest ever party conference “business day” know Labour is committed to building more infrastructure and to a wider industrial strategy but are now desperate to hear the details of how these will both brought about into living, breathing action by government.
The eyes of the business world now become firmly fixed on the Budget and the publication of the industrial strategy green paper. These are parliament defining moments for Labour, who will be hoping to regain control of the narrative following a difficult couple of weeks.