Chancellor Rachel Reeves has revealed major changes to speed up infrastructure projects and unlock private investment in a bid to kick-start the “national mission” of economic growth.
Ms Reeves will use her first major speech to say she will take “difficult decisions” because there is “no time to waste” with boosting growth.
She will say Labour will “fix the foundations” of the British economy, arguing that 14 years of Conservative rule had cost £140 billion ($179bn) in lost growth.
Keir Starmer’s administration has made faster economic growth, and the tax revenue that would flow from it, a crucial part of its strategy to fund public services which are struggling for cash.
The Labour manifesto committed to wholesale planning reforms to make it easier to build and a greater focus on driving through infrastructure projects which have become mired in delays.
“Where governments have been unwilling to take the difficult decisions to deliver growth – or have waited too long to act – I will deliver,” Ms Reeves will tell business chiefs in London.
“It is now a national mission. There is no time to waste.”
She will set out the steps the government has taken to “fix the foundations of our economy, so we can rebuild Britain and make every part of our country better off”.
With forecasts for the public finances indicating a squeeze of up to £20 billion in spending on departments where budgets are not protected, Labour will rely on increased growth to keep its promises of not returning to austerity and avoiding tax hikes beyond the measures it has already announced.
The Chancellor will say that failing to keep pace with the average level of growth in the OECD group of developed countries has cost the Exchequer £58 billion in tax revenue.
“We face the legacy of 14 years of chaos and economic irresponsibility,” Ms Reeves will say.
“New Treasury analysis I requested over the weekend exposed the opportunities lost from this failure.
“Had the UK economy grown at the average rate of OECD economies since 2010, it would have been over £140 billion larger.
“This could have brought in an additional £58 billion in tax revenue last year alone to sustain our public services.
“It falls to this new government to fix the foundations.”
The MPs in the new Labour cabinet – in pictures
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Britain's new Prime Minister Keir Starmer delivers his first speech outside 10 Downing Street in London, Britain, 05 July 2024. EPA -
Angela Rayner is the Deputy Prime Minister and Secretary of State for Levelling Up, Housing and Communities. EPA -
Rachel Reeves is the Chancellor of the Exchequer. Getty Images -
David Lammy is Secretary of State for Foreign, Commonwealth and Development Affairs. EPA -
John Healey is Secretary of State for Defence. Bloomberg -
Pat McFadden is Chancellor of the Duchy of Lancaster. EPA -
Yvette Cooper is Home Secretary. EPA -
Shabana Mahmood is Lord Chancellor and Secretary of State for Justice. EPA -
Wes Streeting is Secretary of State for Health and Social Care. Reuters -
Bridget Phillipson is Secretary of State for Education. Getty Images -
Ed Miliband is Secretary of State for Energy Security and Net Zero. Getty Images -
Liz Kendall is Work and Pensions Secretary. Reuters -
Jonathan Reynolds is Business and Trade Secretary and the president of the Board of Trade. Getty Images -
Peter Kyle is Secretary of State for Science, Innovation and Technology. Getty Images -
Baroness Louise Haigh is Transport Secretary. Getty Images -
Lisa Nandy is Culture Secretary. EPA -
Steve Reed is Environment, Food and Rural Affairs Secretary. Reuters -
Hilary Benn is Northern Ireland Secretary. AFP -
Ian Murray is Scotland Secretary. EPA -
Jo Stevens is Secretary of State for Wales. EPA
The Treasury indicated Ms Reeves would announce swift changes to unblock infrastructure and private investment.
Ms Reeves has previously branded the planning system “the greatest single obstacle” to economic success.
Labour’s manifesto committed to a 10-year infrastructure strategy to guide investment plans and give the private sector certainty about the project pipeline and the creation of a National Infrastructure and Service Transformation Authority to oversee schemes.
The manifesto also promised to update the planning policy to make it easier to build laboratories, digital infrastructure and gigafactories as well as 1.5 million homes.
The Institute for Government think tank called on Ms Reeves to commit to a series of changes, including a multiyear spending review and a wider mandate for the Office for Budget Responsibility.
“Rachel Reeves has the opportunity to set her stall out early and secure a lasting legacy by reforming how fiscal policy is made,” IfG deputy economist Tom Pope said.
“She has already made welcome commitments to strengthening the role of the OBR and holding only one major fiscal event each year.
“But she should go further, including by reforming the fiscal rules and committing to a new approach to spending reviews, if she wants to deliver on the new government’s missions and break the cycle of excessive and unstrategic policy tinkering that has undermined her predecessors.”
