‘Where does the money come from? Reeves on the spot to explain Labour growth plan

Rachel Reeves questioned on Labour's growth plan

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The Shadow Chancellor criticised the Conservative Government policy of increasing national insurance contributions by 1.25 percent from April. Ms Reeves condemned the pressure being placed on workers during the cost of living crisis as the Government continues to dodge the introduction of a windfall tax against energy companies. Despite her criticism, the Labour MP seemed reluctant to explain the costing details of her party’s suggested emergency budget to tackle the crisis.

Speaking to BBC Radio 4, she said: “We are the only G7 economy that is increasing taxes on working people right in the middle of a cost of living crisis.”

Ms Reeves continued: “It means even before anyone pays a bill or does their food shop they’ve got less money in their purse and their wallet.

“It is causing real hardship for working people but it’s also taking money out of the economy.

“We’re seeing more and more businesses struggling because people have money for the essentials, if they’re lucky, but for very little else.

“It is also contributing to those revisions down for GDP growth from the Bank of England and IMF and others in the last couple of weeks.”

Radio host Amol Rajan interrupted the Shadow Chancellor to clarify her criticism of the Tory policy.

He said: “Sorry to interrupt – just to be clear you’d scrap it, would you reverse that rise in national insurance?”

Ms Reeves replied: “Well that’s what we would do right now and that is what is part of our emergency budget.

“Our emergency budget includes the windfall tax to reduce people’s energy bills, a programme of home insulation and scrapping that increase in national insurance for reasons I’ve set out.

Read more: ‘I’ve been missing out!’ Britons urged to check NI code

Mr Rajan, media editor for the BBC, asked how the Labour MP intended to encourage economic growth for the UK while also reducing tax pressures on working people.

He added: “And what would you do to generate some growth?

“Because there is a criticism of your party that you’ve talked about the windfall tax, you’ve talked about tax rises or extending tax benefits and stuff like the warm homes discount but we haven’t had as much clarity on a clear and costed plan for growth.

“So can we have a clear and costed policy idea that you think would have an immediate impact on growth.”

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Ms Reeves highlighted the Labour climate investment pledge to provide £28 billion annually for the next decade to fund future industries.

Mr Rajan interjected again to ask: “But where do you find this £28 billion?”

The Shadow Chancellor finally clarified that Labour intended to fund the investment by borrowing money.

She said: “For capital spending, it is reasonable to borrow that money because it has a long-term return.”

“I’ve set out fiscal rules that all day to day spending has got to be paid for by tax revenues, that we would get our debt down as a share of GDP.

“Subject to that, we would prioritise investment in the jobs and in the industries of the future, to create those well-paid opportunities right round the country.

“This is the real way to level up our economy by ensuring that those jobs exist, not just London and the South East but on the North East coast, in Scotland, in Wales, in those coastal communities, those former industrial communities where there is so much potential but the Government are not realising it.”

Ms Reeves appeared confident that the Labour strategy of borrowing funds for long-term investment would offer a costed solution to economic problems in the UK.

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