UK

Rachel Reeves interview: ‘There’s more to economic policy than tax and spend’

Katie Neame & Tom Belger    

26th June, 2024

Shadow Chancellor Rachel Reeves has argued that there is “more to economic policy than tax and spend”, using an interview with LabourList to criticise “cynicism” about Labour’s hopes of growing the economy.

The Institute for Fiscal Studies (IFS) recently reiterated its criticism of Labours’ and the Conservatives’ election manifestos, with its director claiming that whoever takes office will likely face a “stark choice” between more borrowing, tax rises or spending cuts.

Speaking exclusively to LabourList on Tuesday, Reeves said: “I know there’s a lot of cynicism from people saying: ‘It’s not possible to grow the economy.’ I know it is. Businesses tell me that they have money to invest but they need the stability that Labour offers and the investment alongside the reform to our economy.”

“I know there are opportunities to grow the economy if we can bring back that stability so that businesses and families can plan for the future, and if we can unlock that private sector investment through the national wealth fund, through the modern industrial strategy,” the Shadow Chancellor added.

“There’s more to economic policy than tax and spend, and that’s all we’ve really spoken about during this campaign. It’s all I get asked about. There’s a lot more to the economy than how much you tax and how much you spend.

“Growth is the missing ingredient. It’s been missing in this election debate from a lot of the commentators, and it’s been missing in the UK economy these last 14 years. And that I’m determined to turn around.”

Asked why Labour has not set out plans for any wealth taxes, she told LabourList: “Because I want to be the government of wealth creation. We want to be a government of wealth creation, and I just don’t think you can tax and spend your way into a stronger economy.

“We’ve got to invest our way there and to unlock private sector investment. I’m not interested in tinkering around with tax rates. What I want to do is unlock the private business investment that we need to grow our economy and improve living standards, and that’s where my focus will be.

“I know it’s not going to be easy reforming the planning system and the pension system, bringing in a modern industrial strategy and a national wealth fund, reforming our skills system.

“None of those things are easy – but those are the battles that I’m going to fight so that we can bring more good jobs, more prosperity to communities across our country.”

IFS director Paul Johnson said earlier this week: “Regardless of who takes office following the general election, they will – unless they get lucky – soon face a stark choice.

“Raise taxes by more than they have told us in their manifesto. Or implement cuts to some areas of spending. Or borrow more and be content for debt to rise for longer. That is the trilemma. What will they choose? The manifestos have left us guessing.”