Sound controls

Work means ‘sound money’, Starmer to say at party conference

Labor leader Sir Keir Starmer will use his conference speech on Tuesday to tell British voters that his party stands for ‘sound money’ as it seeks to take over economic competence from the ruling Conservatives.

He will criticize Chancellor Kwasi Kwarteng’s tax cut and high borrowing mini-budget announced last week, which rattled markets and sent the pound to historic lows on Monday. The plan included a series of tax cuts, including the abolition of the top 45% tax bracket which applies to income above £150,000.

“What we have seen from the government in recent days is unprecedented,” Starmer will say. “They lost control of the British economy — and why? For tax cuts for the richest 1% of our society.

Starmer claimed that Labor was “the party of the centre” and dubbed it “the political wing of the British people”, borrowing a phrase from former Labor leader Sir Tony Blair.

The conference will be cheered by news of a Times-commissioned YouGov poll showing Labor had a 17-point lead over the Tories, the party’s biggest lead in 21 years, dating back to when Blair was number 10.

On Monday, Labour’s shadow chancellor Rachel Reeves promised that if in power the party would restore the top income tax bracket and spend the profits to increase the number of doctors and nurses in the NHS.

She told delegates at the Liverpool conference that a Labor government would use the £2billion raised through the reimposition of the top group to tackle the acute staffing crisis in the NHS.

The money would fund the training of more than 5,000 new health visitors, create another 10,000 nursing and midwifery placements each year and double the number of medical students.

She accused new Prime Minister Liz Truss of abandoning the previous Conservative government’s ‘race to the top’ scheme, designed to rebalance the economy away from London and the South East. Instead, Truss was pursuing a “trickle down economy” in which taxes are changed to help the wealthy generate broader economic growth. “This idea has been tried and tested and failed,” she said.

Reeves said as Chancellor she would maintain a tight grip on Britain’s public finances, unlike Kwarteng who last week announced more borrowing than in any budget since 1972 at a time when inflation was already high and interest rates rising.

The so-called mini-budget rattled markets as investors sent the pound plunging and gilt yields soaring. “The message from the financial markets was clear on Friday, and this morning that message is even clearer: the pound is down. This means higher prices as import costs rise,” she said.

Reeves said a Labor government would ensure all its policies were ‘carefully costed and fully funded’ as she accused the Tories of breaking their own budget rules 10 times in the 12 years they have been in power .

The trickle down economy is no substitute for a growth plan

The Shadow Chancellor lambasted the Tories for ‘piling over £50bn of national debt every year, due to their reckless decision to put all the costs on borrowing’.

A Labor government would also reverse Kwarteng’s £17billion-a-year corporation tax cut, but retain the Chancellor’s two other big cuts: a £13billion cut in National Insurance and the basic rate of income tax from 1p next April to 19p, worth £5bn.

One of the biggest differences in economic policy between the government and the opposition at the moment is rather the extent of the measures to deal with the energy crisis.

The government said on Friday its energy price cap program would cost £60billion for just six months. The bailout – made up of £31bn for households and £29bn for businesses – will largely be funded by huge borrowing.

Labour’s energy bailout, announced in August, would have cost just £29billion over the same period because it would have been targeted only at households. The party said it would have been funded by extending the existing energy windfall tax, scrapping the government’s £400 universal payment this autumn and cutting state debt repayments as intervention would have reduced inflation.

Labor is said to have only introduced a £1billion support package for businesses aimed at energy-intensive industries and offered a further £1billion reduction in commercial tariffs for small businesses – paid for by a £2 billion increase in the Digital Services Tax.