Cuts question

Reeves says growth key to funding public services

Rachel Reeves: no overnight turnaround

Shadow Chancellor Rachel Reeves today said Labour would ‘get to work’ on how to avoid cuts in public services, but said it was important to stick to the fiscal rules.

Amid growing pressure on Labour to say whether it would cut spending, Ms Reeves said Labour would encourage business investment in order to achieve the growth needed to fund the public sector.

Last week Paul Johnson, the director of the Institute for Fiscal Studies, accused the two main parties of a “conspiracy of silence”.

He said neither was acknowledging “just how tightly squeezed public spending will be” and that their spending plans “involve significant cuts in a whole range of public services”.

Mr Johnson added: “No one is talking about that, no one is saying where those cuts would come from, or whether there would be significantly more borrowing, or whether taxes would go up.” he said.

Pressed on whether Labour would be forced to instigate cuts, Ms Reeves said: “I have to be honest that we’re not going to be able to turn things around straight away but we will get to work on all of that.

“I am under no illusion about the scale of the inheritance [of debt],” she added, saying that it will be “the worst since the Second World War.”

But referencing the reaction to former Prime Minister Liz Truss’s mini-budget, she said adhering to the fiscal rules and making sure the sums add up was “incredibly important”.

She said the party’s earlier commitment to invest £28 billion in the green economy had been derailed by soaring borrowing costs. Ms Reeves explained that when it was first devised interest rates stood at 0.1%.

“Everything in our manifesto will be fully costed and fully funded,” she declared, adding that Labour was committed to investing in the economy.

Business investment in the UK is lower than in any other G7 economy and growth is the number one priority for Labour, she said in a television interview.

She referred to Labour’s plan to set up Britain’s first national wealth fund by providing up to £7bn supported by the private sector injecting its own funds.

Ms Reeves said this would help create the jobs of the future, such as carbon capture and storage and green steel, adding that businesses were “ready to go” with projects if the government kickstarts the fund.

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