Labour lawmakers are appealing to the Chancellor Rachel Reeves to commit tens of billions more to disadvantaged public services.
A group of some 70 Labour MPs sent a letter to Reeves urging her to commit to a major overhaul of fiscal rules that would invest tens of billions in schools, hospitals, transport links and other critical infrastructure as part of the budget after 100 days in the office.
The Labour Growth Group letter says Labour must not repeat the mistakes of previous Tory governments by shying away from “tough choices required to unlock investment” and boost growth. In this way, Reeves might secure changes to reflect the value of new assets created through investment in the calculation of British debt. The letter reads:
It is time to value these assets properly in our fiscal framework … Time is of the essence – the sooner we invest, the sooner our constituents will begin to benefit from that investment in their communities. If we delay, we risk further entrenching the barriers to growth that have held our country back for too long. We say this upcoming budget is the time to grasp the opportunity before us and act with conviction.
The group’s letter expresses concerns the chancellor may opt for less ambitious changes, such as removing Bank of England losses from debt calculations, which would free up between £10 billion and £20 billion. This comes as MPs also seek immediate action on investment that will bring tangible benefits by the next election.
Sources close to the chancellor say there is plenty of scope for change and that the new rules will provide a much more sensible amount of fiscal headroom to help the government plan for the longer term. In the meantime, the measure has the potential to unlock up to £50 billion, according to the Institute for Fiscal Studies, although the amount earmarked by the Chancellor is likely to be significantly less.
Besides, the chancellor is expected to rewrite the fiscal rules, even though the final details of the budget have yet to be confirmed. Reeves is considering increasing national insurance for employers, which could be more of a political risk.
Lucy Rigby, co-chair of the Labour Growth Group, stated that the government needed to “break the Tory doom loop of low investment, low productivity and low growth if we’re going to deliver the change our constituents want to see” in their communities. “There is no time to waste and that’s why we’re encouraging the chancellor today to be bold and ambitious in investing for growth in the coming budget,” she said.
