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‘The Conservatives are gaslighting the British public’ – Rachel Reeves’ economic future speech in full

Shadow chancellor Rachel Reeves accused the government of “gaslighting” the public about the economy in a major speech on Tuesday morning. 

She said ministers’ optimistic statements are “out of touch” with Britons still struggling with the cost of living.

It comes ahead of key figures likely to show the UK emerging from recession later this week. The Bank of England could also take steps towards interest rate cuts.

Read the shadow chancellor’s speech in full below: 

As the dust from the local elections settles, the verdict is clear:

From the market towns of North Yorkshire to the home of the British army in Rushmoor,

In England’s great cities and across the Midlands,

People voted for change.

These results show that there are no more no-go areas for the Labour Party.

And it’s not just about where you live;

But who you are.

Because if you are a young person starting out in life;

If you’re at work and starting a family;

Or you’re planning for, or in, retirement;

This Labour Party will fight for you.

This Labour Party will serve your interests.

And we will continue to work to earn your trust.

This week, while the Tories squabble about which way to turn, talking only about themselves,

I want to talk instead about what’s going on in the country – about the state of family budgets and the future of our economy.

Because Keir and I know that if we are to change our country, to invest sustainably in our public services, to make working people better off, then building a stronger, more dynamic economy must come first.

So, today I want to take head on the claims we can expect to hear from Rishi Sunak and Jeremy Hunt in the weeks ahead;

To tackle the economic fiction peddled by government ministers.

To show that the path towards decline is not inevitable.

That Labour is ready to serve the interests of the British people.

And to make the case for change.

By the time of the next election, we can – and should – expect interest rates to be lower, Britain to be out of recession and inflation to have returned to the Bank of England’s target.

Indeed, these things could happen this month.

I already know what the Prime Minister and Chancellor will say in response to one or all these events happening.

They have been saying it for months now.

“Our plan is working.”

“The economy is turning a corner.”

“Stick with us.”

In fact, that’s almost exactly what the Prime Minister said in his statement following the disaster that was the Conservatives’ local election performance last week.

But I want to take those arguments head on.

Because they do not speak to the economic reality.

During the local elections I travelled across the country.

I spoke to hundreds of people.

I listened to their stories.

The family I met in Redcar:

The dad doing an apprenticeship, the mum working in a supermarket;

Who spend every evening talking about money, because there’s just not enough to pay the bills.

The small business owner in Milton Keynes, desperate to expand, but faced with a system of business rates stacked against them.

The worker at the train manufacturer Hitachi in Newton Aycliffe, who trained up for what he thought was a job for life – but now finds it all at risk thanks to this government’s actions.

When they hear government ministers telling them that they have never had it so good.

That they should look out for the ‘feelgood factor’.

All they hear is a government that is deluded and completely out of touch with realities on the ground.

The Conservatives are gaslighting the British public.

They say we’ve turned a corner.

But try telling that to the 6.4 million households across England and Wales that last year saw their rent increase or had to re-mortgage.

Or the 950,000 families whose mortgage deal is due to expire between now and January.

They say “the plan is working”.

Is this the same plan that has meant this is forecast to be the first Parliament on record with living standards actually lower at its end than at the start?

Real household income on course to have fallen by £250 per person in that time;

Our economy smaller per person than it was when Rishi Sunak became Prime Minister.

And our economy forecast by the OECD to grow by just one percent next year, weaker than every other G20 country except Russia.

And they ask people to stick with the Conservatives.

But it is those very Conservatives who are set to leave the average household £870 worse off through stealth taxes and hikes in council tax.

The Prime Minister claims he is delivering for the country – but the British people didn’t order what the Tories are delivering.

You have to ask yourself:

Is this the limit of their ambition for Britain’s economic future?

If you want to know what five more years of the Conservatives would look like, just look at their record over the last 14.

The greatest tax burden for 70 years.

National debt at the highest it has been since the 1960s.

Families paying hundreds of pounds more on monthly mortgage bills.

Prices still significantly higher in the shops.

Economic growth on the floor.

If the UK economy had grown at the average rate of the OECD under the Tories, it would now be £140 billion larger;

Providing an additional £50 billion in tax revenues to invest in our public services.

Instead, the Tory legacy is a Britain that is poorer.

Working people worse off.

Taxes rising, yet public services in ever deeper crisis.

Let me be clear – Keir Starmer and I won’t be doing a victory lap for finally meeting the inflation target for the first time in three years.

And we won’t be doing a victory lap over going from negative growth to no growth either.

If Jeremy Hunt wants to call it a ‘technical’ recession, then I assume he’s comfortable calling it a ‘technical’ recovery.

Not a recovery for working people.

Not a recovery for families struggling with a mortgage.

Not a recovery from 14 years of Conservative economic failure.

No, we won’t have turned a corner until working people feel they are better off.

Because the state of the economy is about much more than lines on a graph.

It’s about the state of our high streets, the security of work, and the money in people’s pockets.

So what is the Tories’ last, desperate throw of the dice?

A £46 billion unfunded plan to abolish national insurance contributions.

If Labour had put a similar proposal on the table, voters, journalists and our opponents would be demanding to know where the money was going to come from.

And yet two months on from the Spring Budget – and despite having countless opportunities to clarify their plans – there are still no answers from ministers on how they will pay for it.

What services will they cut?

What other taxes will they put up?

What changes will they make to pensions?

New analysis has shown that replacing national insurance contribution revenues with higher basic and higher rates of income tax would mean rates of income tax going up by eight percent.

A tax bombshell aimed squarely at Britain’s pensioners.

There is no coherent argument behind this plan.

You don’t have to take my word for it.

Because it was the Prime Minister’s hero – the former Chancellor Nigel Lawson – who dismissed the idea of abolishing national insurance nearly forty years ago.

He advised the then Prime Minister, Margaret Thatcher, that such a choice had, I quote, “little practical merit” – that “it would destroy the contributory principle and create many losers, especially among the elderly.”

Now, I realise that a few weeks ago I spent a long time arguing in my Mais lecture that Nigel Lawson was wrong.

But on this, he was right.

And his argument then is still right today.

But Rishi Sunak and Jeremy Hunt are ploughing ahead with this reckless plan in a desperate attempt to keep their divided party on side.

More tunes from the Liz Truss songbook.

It’s party first, country second.

Chaos over stability.

Recklessness over responsibility.

Decline over prosperity.

That is the Conservatives’ record in power.

And now all Rishi Sunak and Jeremy Hunt can offer is more of the same.

Low growth, higher taxes, and public services in deep decline.

Putting out the same soundbites over and over again and hoping something will turn up.

That their record of failure will somehow be forgiven or forgotten.

Or that people will finally believe them.

Neither will happen.

Because the Conservatives’ economic model has failed on its own terms.

Their plan is not working.

We have not ‘turned the corner’.

They’ve crashed the car and left it by the side of the road.

Content to be managers of decline.

And what they’re really saying is that this is the best you should hope for.

But I know we can do so much better.

People want change.

And it falls to us – the Labour Party – to offer that change.

To show the ambition the British people share;

The ambition they feel for their families, their communities, and their country.

Not gimmicks, not short cuts, no more pursuit of narrow political dividing lines at the expense of the national interest.

But facing, unflinchingly and without illusions, the inheritance we will face.

Bringing a laser focus to bear on the barriers to economic growth.

And offering a plan for a new economy, driving the economic growth which will raise living standards, resource public services, and let Britain compete in the world once again.

I know what critics say.

‘Doesn’t everyone want economic growth?’

I know that warm words are not enough.

I do not underestimate the challenges we face.

But I know the huge potential found all across Britain.

The constraints that are holding that potential back are not immutable forces.

But overcoming them requires vision, courage, and responsible government.

Vision – to pursue a different approach, drawing on new economic thinking shaping governments in Europe, America and around the world;

Courage – to put the public interest before short-term party politics;

Taking on the vested interests that hold our country back.

And responsible government – offering stability of direction in a fast-changing world.

Because, after years of political chaos and short-term thinking, at this election stability is change.

The stability on which households and business alike rely if they are to plan ahead.

Stability underpinned by strong fiscal rules and robust, independent institutions – the Treasury, the Bank of England, and the Office for Budget Responsibility.

And stability of purpose enshrined in national missions to bring government and business together, to meet the challenges of the future.

Alongside stability: investment.

Because investment is crucial for economic growth.

It provides the tools and machinery that workers use to do their jobs;

It ensures the infrastructure is there for goods to move around the country and for people to get to work;

And it drives innovation and the diffusion of ideas and technology – the long-term determinants of higher productivity and wage growth.

That’s why Labour will work in partnership with business to remove the barriers to investment.

Partnership embodied in a modern industrial strategy;

With Great British Energy, a new national energy champion, based in Scotland;

And through a National Wealth Fund, providing catalytic public investment to unlock more than £20 billion of private sector investment for our towns, cities and regions.

And alongside stability, alongside investment: reform.

Reform of employment rights – with a New Deal for Working People.

Because there is now a mountain of economic evidence that fair pay and in-work security are crucial not only to fairness and dignity, but to our productivity too.

Reform to our politics.

Because Britain today has one of the most centralised political systems in the world – and some of the highest levels of geographic inequality too.

So we will work closely with our new mayors and our local leaders to deliver for their regions.

And we will introduce a new Take Back Control Act.

New powers for elected mayors over transport, skills, enterprise, energy, planning;

The powers to revitalise our high streets and generate shared, local growth, through Local Growth Plans.

To play their part in a national mission.

And to close the festering gaps between our regions, and our towns and cities.

Reform of our planning system so we can get Britain building again.

Because nowhere is the economic influence of vested interests more pernicious than in our planning system.

It has become a graveyard of economic ambition and a byword for political timidity in the face of vested interests.

That’s why a Labour government will put planning reform at the very heart of our economic and political agenda, and mark an end to prevarication and political short-termism.

This programme is based on a different view of the economy:

It is what I call securonomics.

An approach that seeks to build economic growth on strong and secure foundations;

Rejecting the outdated assumptions of the past;

And recognising that the only viable strategy for growth must put the economic security of households and the resilience of our national economy front and centre.

With an active, strategic state working in partnership – with business, our international allies and our local leaders.

It is one of the great privileges of this job to get away from Westminster.

To see the brilliant things being done by working people, by inventors and entrepreneurs, by businesses in every part of Britain.

To see a country, a people, rich with potential.

Potential too often frustrated by a government that is holding them back.

It is Labour’s mission to change that;

To unlock that potential.

It will take time – a decade of national renewal – but we will not shy from the challenges we face.

It is time for an end to the excuses, the short-termism, and putting politics before the public interest.

The Prime Minister can just say the word – we’re ready.

Labour will fight this next election on the economy.

Every day we will expose what the Conservatives have done to our country.

Because – instead of believing the Prime Minister’s claims that we’ve turned a corner – the questions people will ask ahead of the next election are simple:

Do you and yours feel better off than you did 14 years ago?

Do our hospitals, our schools and our police work better than 14 years ago?

Frankly, is there anything in Britain that works better than when the Conservatives came into office 14 years ago?

The choice at the general election is simple:

Five more years of chaos with the Conservatives that will continue Britain on a path of economic decline.

Or stability with a changed Labour that can offer hope, with a long-term plan to make working people better off.

It is time to turn the page, to start a new chapter for Britain’s economy.

And Labour is ready.

Thank you.