Reeves says she will make statement to MPs before summer recess on ‘spending inheritance’ left by Tories
Rachel Reeves is delivering her first major speech as chancellor.
She started by announcing that before the summer recess she will make a statement to MPs about the government’s spending inheritance. She said what she has seen in her first 72 hours confirmed that the economic situation was as bad as she thought.
She said:
I have repeatedly warned that whoever won the general election would inherit the worst set of circumstances since the second world war.
What I have seen in the past 72 hours has only confirmed that. Our economy has been held back by decisions deferred and decisions ducked. Political self-interest put ahead of the national interest. A government that put party first and country second.
We face the legacy of 14 years of chaos and economic irresponsibility.
That is why over the weekend, I instructed Treasury officials to provide an assessment of the state of our spending inheritance so that I can understand the full scale of the challenge. And I will present this to parliament before the summer recess.
This will be separate from a budget that will be held later this year. And I will confirm the date of that budget alongside a forecast from the Office of Budget Responsibility in due course.
This sounds like a major “blame the Tories’” exercise. In an extract from the speech released in advance, she said taxpayers were losing out because of the way growth stalled under the last government. She said:
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 £140bn larger.
This could have brought in an additional £58bn in tax revenues last year alone to sustain our public services.
It falls to this new government to fix the foundations.
UPDATE: There was a transcription error in an earlier version of this post. It said that what the Treasury had found in the past 72 hours showed there was “no money left”. That phrase was wrongly included by mistake, and has now been removed from the quote above.
Key events
Emily Thornberry says she is ‘very sorry and surprised’ not to become attorney general, job she shadowed
Keir Starmer has, so far, mostly appointed ministers to do jobs that they were shadowing in opposition. But one exception is the attorney general. Emily Thornberry was shadow attorney general, but on Friday No 10 announced that Richard Hermer KC is geting the job, as well as a peerage so that he can serve in government from the House of Lords.
Thornberry does not seem to be getting an alternative job. She has released a statement this morning saying that she is “very sorry and surprised” not to be attorney general, but that Hermer is a “much more accomplished lawyer” than she is.
Thanks to everyone who has been in touch asking about my own future in the new Labour government. Here is my statement 👇🏽 pic.twitter.com/dRlW0RaW1D
— Emily Thornberry (@EmilyThornberry) July 8, 2024
There was a transcription error in the post at 10.49am. Rachel Reeves said that the economic inheritance was as bad as expected, but she did not say there was no money left. I’m sorry for the mistake.
Q: Will HS2 go to Leeds?
Reeves says in opposition she did not make promises without knowing where the money would come from. That same approach will apply in government, she says.
And that is the end of the Q&A.
Q: If the pay review bodies recommend big pay rises, do you have enough money to fund those?
Reeves says she will be presenting to parliament the Treasury’s assessment of the state of the public finances before the end of this month.
With public sector pay, there is a process. She will go through that.
She says the government will have to take “difficult decisions” because of the “mess left by our predecessors”.
But she wants to turn things round, she says.
Reeves says Tories were the ‘anti-growth coalition’
Q: Liz Truss said there was an anti-growth coalition. Do you agree?
Reeves says the Tories were the anti-growth coaliton. The voters kicked them out.
Q: Will your plans for new housing include energy efficiency standards?
Reeves says that will be a matter for the housing deparment. But the government is committed to energy efficiency, she says.
Q: Are you worried about the OBR downgrading its growth foreceast?
Reeves says she hopes people will see from her plans that she is serious about growing the economy. The OBR is forecast growth at about one and two thirds per cent a year. She wants to improve that.
Q: Will you change the interest paid on Bank of England reserves?
Reeves says she does not have any plan to do that.
Q: Will you encourage people to downsize?
Reeves says the government wants to increase the supply of homes, so that if people want to downsize, they can. She wants to give people choice.
Q: Will the budget be nearer to September or November?
Reeves says it will be in the autumn. She will set out the date before the summer recess.
Q: We have not built 300,000 new homes a year since the 1950s. When will you be able to reach this target? And will you tweak targets so they go in the right place?
Reeves says she is announcing new homes today. They are spread around the country.
The government will deliver on its manifesto commitment, she says.
She says people cannot be in doubt about the seriousness of the government’s intent.
Q: You are not the first chancellor to promise economic growth. Every chancellor promises this. When will this happen? By the end of this parliamentary term? Or 10 years?
Reeves says there is no time to waste. That is why she is giving this speech after 72 hours. The government has a mandate for change.
And she has already had a report from the national wealth fund taskforce. She will be responding to that in due course, she says.
She says she cannot change things overnight. But she is working on change.
It is fine to say you want growth. But you have to “will the means”, she says. She says those difficult decisions have been ducked over the past 14 years.
Reeves says she does support development, and has done as a local MP.
She says there are projects that have been stalled that will now go forward.
But “this is not a green light for any type of housing”, she says.