Rachel Reeves has warned of “harsh global headwinds” battering Britain’s economy, as she failed to dispel fears over major tax rises at the next Budget.
In an upbeat but policy-light speech on the main stage of the Labour conference in Liverpool, the chancellor attempted to fight back against a growing sense of doom and gloom about the economy, instead saying she sees a country that is “primed for economic success”.
She also appeared to take aim at Andy Burnham over his economic approach, warning that unrestrained borrowing is “dangerously wrong”.
Appearing more confident and relaxed than she has been in months, the chancellor received ten standing ovations as she set out her pitch to Labour members ahead of what will be a difficult Budget in November.
“Don’t ever let anyone tell you that there’s no difference between the Conservatives and Labour”, she repeatedly warned.
The buoyant applause from Labour members throughout the speech indicates they have not given up on the beleaguered chancellor after a difficult first year that saw widespread rumours that she could be demoted.
However, it comes amid rampant speculation over tax rises at the next budget after the chancellor earlier on Monday admitted that “the world has changed” since she promised business chiefs she would not repeat the tax raid of her first budget.
Ms Reeves told delegates she would keep control of the public finances and would “not take risks with the trust placed in us by the British people”.
But she acknowledged that her choices had been made “harder” by international events and the “long-term damage” done to the economy.
As the government gears up to fill a black hole worth tens of billions of pounds in the public finances, the chancellor told BBC Radio 4’s Today programme ahead of her speech: “Whether it is wars in Europe and the Middle East, whether it is increased barriers to trade because of tariffs coming from the United States, whether it is the global cost of borrowing, we’re not immune to any of those things.”
“It’s very important that we maintain those commitments to economic stability because we rely on people to buy Government debt to be able to finance the things that we’re doing as a country.
“I wish it wasn’t so, but I am chancellor in the world as it is, not the world that I might wish it to be.”
She later told the conference: “In the months ahead we will face further tests, with the choices to come made all the harder by harsh global headwinds and the long-term damage done to our economy, which is becoming ever clearer.”
Experts have said Ms Reeves will have to increase taxes or cut spending to fill a black hole in her budget, which the National Institute of Economic and Social Research has estimated could be as much as £50 billion.
Ms Reeves said she would make choices at the budget that “take our country forward”, adding: “Whatever tests come our way, whatever tests come my way, I make this commitment to you: I will take no risks with the trust placed in us by the British people.”
Speaking to Sky News after the speech, Cabinet minister Darren Jones failed to rule out claims that Labour would ditch its manifesto commitment to not raise VAT, income tax or national insurance for working people.
“I am not ruling anything out, or anything in. All I’m saying is today the manifesto stands.
“We’ve got a budget process to go through, and any decisions will be announced to Parliament in the normal way,” the PM’s chief secretary said.
Meanwhile, a spokesperson for Ms Reeves insisted: “We made those commitments in the manifesto. We kept those commitments in the manifesto. And we stand by those commitments in the manifesto”.
In her speech, the chancellor confirmed plans for a youth guarantee, offering paid work to young people who had spent 18 months not in employment, education or training.
She also said the government would “push ahead with our plans for Northern Powerhouse Rail” linking towns and cities across northern England, as well as setting out plans for a library in every English primary school.
With Labour trailing Reform UK in the polls, Sir Keir Starmer’s leadership has been questioned, with Greater Manchester mayor Andy Burnham claiming he had been urged by some MPs to challenge him.
In what appeared to be a reference to Mr Burnham’s pitch to voters, Ms Reeves said: “There are still those who peddle the idea that we could just abandon economic responsibility and cast off any constraints on spending.
“They are wrong – dangerously so.”
Mr Burnham has suggested the UK has “got to get beyond this thing of being in hock to the bond markets” as he set out plans for billions more borrowing.
The chancellor acknowledged the year had “brought its fair share of challenges for our party and our country” and added “they won’t be the last”.
She said: “Whatever tests confront us, have faith, because our party and our country have overcome greater challenges than these”.
Part-way through the speech, the chancellor received her third standing ovation after responding to a pro-Palestine heckler who interrupted her main stage address.
Waving a Palestinian flag, the protester shouted: “Israel is committing genocide” – but the chancellor pushed back: “We understand your cause and we are recognising a Palestinian state…That is the difference we make in power not through protest.”
