Keir Starmer is seeking to draw new battle lines with Liz Truss as he pledges to restore the top rate of income tax and funnel the resulting billions into the NHS and other public services.
The Guardian understands that Labor will explain in more detail on Monday how it would use the money raised by reversing the abolition of the 45p rate outlined by Chancellor Kwasi Kwarteng in Friday’s mini budget.
Shadow Chancellor Rachel Reeves will argue at the party conference that investing in public services such as the NHS, schools and childcare is the only way to lay the foundations for a strong economy – which is what she warns that Truss is endangering.
She told the Guardian: “Liz Truss and I are not that different in age. We both went to our local public schools in the 80s and 90s. But the conclusions we came to after that experience seemed like a world apart. You cannot build a strong economy without strong public services.
On the first day of the Liverpool conference, Starmer said it was ‘extremely divisive’ for ministers to give a tax cut to people receiving more than £150,000, as he pledged to cancel the abolition of the additional rate on the highest incomes. . It could raise at least £2bn, and possibly much more, for public spending.
The Labor leader said he would not reverse the cut in the basic tax rate from 20% to 19% because the party wanted to ‘reduce the tax burden on workers’. But it put him on a collision course with Andy Burnham, the Mayor of Greater Manchester, who said Labor should oppose both tax measures.
Burnham said Labor should go further and reverse the base rate cut as well, because “I don’t think it’s the most targeted way” to help those struggling the most during the cost crisis. life.
“If you cut the rate by 20p, it’s not as targeted a measure as doing other things like supporting people who are at real risk, and those are people with universal credit,” a- he told Sky News‘ Sophy Ridge on Sunday.
Meanwhile, Kwarteng hinted there was “more to come” from the government on tax cuts. “We have only been here 19 days. I want to see, over the next year, people keep more of their money,” he told BBC One on Sunday with Laura Kuenssberg.
The market’s shock reaction to Friday’s mini-budget continued into Sunday night as the pound hit a 37-year low. The pound fell to $1.077 in early trading as Asia-Pacific markets opened after the weekend, approaching parity with the US dollar.
In an interview ahead of his speech, Reeves compared and contrasted his own schooling in London with that of the new Prime Minister, who has come under fire for criticizing his state secondary school in Leeds. The phantom chancellor said she had lessons in prefabricated huts and there were not enough textbooks, but she had received a good education thanks to the commitment of her teachers.
“My lesson is not to cut public services or to say that the state must step aside, but to say that in order to have a strong and growing economy, public services are essential for that,” he said. she stated.
“You can’t have a strong economy unless young people get the skills and education they need. You can’t have a strong economy if parents aren’t supported by good childcare, especially moms, to get back to work.
“You can’t have a strong economy without a properly functioning NHS so that sick people have the opportunity to get back to work. It looked like a budget, but there was nothing in there for public services.
Reeves called on Kwarteng to present a full budget this fall rather than waiting until the end of the financial year next April to present its plans for public services.
She accused the Chancellor of “sitting on” the Office for Budget Responsibility’s draft growth forecasts and pledged to use all available tools, including the humble parliamentary address, to get them published.
“What do they have to hide? If there wasn’t something to hide, they would have released it alongside the flimsy document they released instead,” she said.
Reeves, a former Bank of England economist, said the Tories could achieve ‘a slight increase’ in growth with their plan to ‘throw’ £70billion into the economy, but she said that Labor would hold them to their promise of 2.5% sustainable growth across the country for years.
She said: “We should expect to feel the benefits of this growth next year. If their plan is so good, why not? They have set the bar at 2.5% and that is what we intend to enforce.
Labor backed Rishi Sunak’s plans to raise corporation tax from 19% to 25% which would still leave the UK mid-table out of the G7 countries and below France and of Germany. But she suggested a corporate rate reform would be a more useful policy, as it is currently being paid for by companies before they even make a profit.
She confirmed that Labor would vote against scrapping the cap on bankers’ bonuses in the House of Commons.
Reeves will also pledge that a Labor government will set up a state-owned investment fund if it wins the next general election.
She will say the fund would allow the state to invest directly in projects and create a return for taxpayers by investing in national programs such as battery plants and renewable energy-ready ports, as part of Labour’s mission to “build British industry”.
She will argue that the policy is a “real plan for the climate”, a “real plan for growth” and a “real plan for upgrading”. It would be funded by a national wealth fund, with the party’s Green Prosperity Plan, which was announced at the last Labor Conference, putting an initial £8.3billion into a central pot.