Chancellor’s warning on economy comes as unions prepare to vote against winter fuel cut at conference
Britain faces economic ruin unless the public finances are stabilised, Rachel Reeves will argue on Monday amid a winter fuel rebellion at the Labour conference.
Addressing delegates for the first time as Chancellor, Ms Reeves will insist that “tough decisions” on spending and taxation are necessary to bring about economic growth.
Her speech will further raise fears of a raft of tax rises in next month’s Budget.
Ms Reeves and Sir Keir Starmer, the Prime Minister, could also face embarrassment as delegates at the conference in Liverpool vote on whether to oppose the cut to winter fuel support.
Five trade unions have thrown their weight behind a motion set to be critical of the Government’s decision to remove the payments of up to £300 from almost all pensioners.
A formal rejection by the conference of one of the first major decisions the Government took would be a symbolic rejection of Downing Street’s approach.
In her speech on Monday, Ms Reeves will set out why she must make “tough decisions”, claiming the Tories left a £22 billion “black hole” in the public finances.
The Chancellor will say: “I can see the prize on offer if we make the right choices now. And stability is the crucial foundation on which all our ambitions will be built, the essential precondition for business to invest with confidence and families to plan for the future.
“The mini-Budget showed us that any plan for growth without stability only leads to ruin. So we will make the choices necessary to secure our public finances and fix the foundations for lasting growth.
“Stability, paired with reform, will forge the conditions for business to invest and consumers to spend with confidence. Growth is the challenge, and investment is the solution.”
Ms Reeves will also offer new hints about the Oct 30 Budget, which Sir Keir has warned will be “painful”.
She will say: “There will be no return to austerity. Conservative austerity was a destructive choice for our public services, and for investment and growth too.
“We must deal with the Tory legacy, and that means tough decisions. But we won’t let that dim our ambition for Britain. So it will be a Budget with real ambition. A Budget to fix the foundations. A Budget to deliver the change we promised. A Budget to rebuild Britain.”
The pledge to avoid spending cuts similar to those brought in by George Osborne in 2010 comes amid fears of tax rises in the Budget.
It suggests Ms Reeves could unveil greater spending than the Tories had planned in office, which had public spending annually growing at one per cent in real terms. But it is unclear how that money would be raised, with tax rises of some form likely to come to pay for the extra spending.
In her speech, Ms Reeves will repeat the Labour election manifesto pledge not to increase National Insurance, income tax rates, VAT, or the corporation tax rate.
But there is no mention of capital gains tax and inheritance tax, further fuelling speculation that tax rises on wealth are possible.
Treasury sources did, however, indicate that they would not scrap the single person council tax discount or introduce a new standalone wealth tax.
A motion urging the Government to reverse the decision to scrap winter fuel payments for millions of pensioners is expected to be put to Labour conference delegates on Monday afternoon.
The exact wording of the motion is set to be decided on Sunday night, but it will almost certainly include explicit opposition to the policy, which trade union bosses have described as “cruel” and “politically inept”.
