Rachel Reeves says new government has inherited ‘worst set of circumstances since second world war’ – UK politics live

Rachel Reeves is delivering her first major speech as chancellor.

She started by announcing that before the summer recess she will make a statement to MPs about the government’s spending inheritance. She said what she has seen in her first 72 hours confirmed that the economic situation was as bad as she thought.

She said:

I have repeatedly warned that whoever won the general election would inherit the worst set of circumstances since the second world war.

What I have seen in the past 72 hours has only confirmed that. Our economy has been held back by decisions deferred and decisions ducked. Political self-interest put ahead of the national interest. A government that put party first and country second.

We face the legacy of 14 years of chaos and economic irresponsibility.

That is why over the weekend, I instructed Treasury officials to provide an assessment of the state of our spending inheritance so that I can understand the full scale of the challenge. And I will present this to parliament before the summer recess.

This will be separate from a budget that will be held later this year. And I will confirm the date of that budget alongside a forecast from the Office of Budget Responsibility in due course.

This sounds like a major “blame the Tories’” exercise. In an extract from the speech released in advance, she said taxpayers were losing out because of the way growth stalled under the last government. She said:

New Treasury analysis I requested over the weekend exposed the opportunities lost from this failure.

Had the UK economy grown at the average rate of OECD economies since 2010, it would have been over £140bn larger.

This could have brought in an additional £58bn in tax revenues last year alone to sustain our public services.

It falls to this new government to fix the foundations.

UPDATE: There was a transcription error in an earlier version of this post. It said that what the Treasury had found in the past 72 hours showed there was “no money left”. That phrase was wrongly included by mistake, and has now been removed from the quote above.

Reeves has announced a series of measures to relax planning laws, claiming she has done “more to unblock the planning system in the past 72 hours than the last government did in 14 years”. (See 12.44pm.)

Adrian Ramsay, the Green party’s co-leader, has defended his decision to call for a pause in plans to build pylons in his Waveney Valley constituency in Suffolk to carry energy from offshore wind pylons to other parts of the country.

In an interview with Radio 4’s PM programme, Ramsay said he wanted to see a proper options assessment to assess how the windfarms could be connected to the grid.

When it was put to him that, as a Green MP, he could not oppose offshore wind being taken to where the energy was needed, by the most cost-effective method, Ramsay said he had a background working in renewable energy. He would be arguing for more focus on renewables, he said. “But we’ve got to connect it in the right way,” he said. He said an offshore grid should be considered.

Asked if he could say he would not oppose the pylons plan if a proper appraisal showed that was the cheapest and most effective option, Ramsay said he did not think a proper options assessment had been carried out.

Evan Davis, the presenter, put it to Ramsay that he was ducking the question. In response, Ramsay said he wanted a proper options assessment. He claimed time was available for this.

Keir Starmer has posed for a picture with fellow Labour MPs elected last week. The party won 412 seats, its third highest total on record.

Keir Starmer has described the future of Tata Steel as being of “great concern” following a meeting with the Welsh first minister on the final stop of his tour of the devolved nations, PA Media reports. PA says:

The prime minister visited the Senedd in Cardiff Bay on Monday to meet Vaughan Gething, the leader of Wales, and Jo Stevens, the secretary of state for Wales, PA said.

Starmer had been due to speak to reporters on the balcony of the Senedd, overlooking Cardiff Bay. However, a small but noisy crowd of around a dozen pro-Palestinian protesters outside the Welsh parliament forced interviews to be moved to the fifth floor.

Speaking to broadcasters, Starmer said:

It’s very important to me to reset relations with Scotland, Northern Ireland and Wales, because I want to make sure that we collaborate, there’s mutual respect and trust.

Here in Wales it’s particularly important because what I said before the election is that a Labour government would be a game changer, because you would have a UK government, working with the Welsh government, delivering for Wales, rather than the conflict.

This is an early recommitment to what I said in the campaign … to have discussions with the first minister about the long-term objectives and of course, about some of the pressing issues, including Tata Steel, which is of great concern to me, to the first minister and to so many people here in Wales.

There are many things that indicate when power shifts in the UK, but few things symbolise it more effectively than the removal van in Downing Street. There were two of them there this morning, as the post-election housing handover carried on.

“Reset” seems to be the word of the day. Keir Starmer has been flying around all corners of the UK promising a reset in relations with the devolved governments. Plaid Cymru are saying it must be a “meaningful reset”. This is from Rhun ap Iorwerth, the Plaid leader, who has been meeting his party’s four MPs at Westminster. Ap Iorwerth said:

We made it clear during the campaign, and we make it clear right now, as soon as we can after the government has been formed, that we will hold them to account on behalf of not just the people in the constituencies that we represent but on behalf of all of Wales.

Sir Keir Starmer tells us that he wants to reset the relationship between UK government and Welsh governments, to reset the relationship presumably between the UK government and Wales, but what we say today is that has to be a meaningful reset.

Labour have shown time and time again that they want to cast aside our aspirations on fair funding, on more powers. Our four MPs will not allow that to happen.

More than 400,000 people may have been prevented from voting in the general election because they lacked the necessary ID, with those from minority ethnic communities more than twice as likely to have experienced this, polling has suggested. Peter Walker has the story.

The Conservative party is claiming that Rachel Reeves’s speech this morning implies tax rises are on their way. In response to the passage in the speech where the chancellor said she had commissioned a Treasury review of the “spending inheritance” left by the previous government (see 10.49am), a Tory spokesperson said:

Rachel Reeves herself said you don’t need to win an election to find out the state of the public finances, admitting that with the OBR, there is already detailed public scrutiny of the country’s finances.

We warned that Labour would attempt this ruse as a cause to raid pensions and raise taxes. It is now clear that is coming to pass, and the British people will pay the price.

The spokesperson pointed out that, in an interview during the election campaigin, Reeves told the Financial Times she did not need to wait until taking office to know what the state of the public finances were like. She said:

We’ve got the OBR now. We know things are in a pretty bad state. You don’t need to win an election to find that out.

Tom Clark from Prospect has an explanation for the apparent contradiction.

Before election Reeves said in a world where OBR produced tax & borrowing numbers she couldn’t “open the books” & pretend to find they were worse than feared

But OBR’s work on spending is circumscribed. HMT officials will now review this & duly find outlook “worse than feared”

Ed Davey, the Lib Dem leader, had a meeting with his new MPs at Westminster today. There are 72 of them, a record for the party in its modern form. He told them:

We are here, each and every one of us, because our constituents have put their trust in us to be their local champions.

That trust was hard won. We have spent years rebuilding people’s trust in our party. By speaking for them, listening to their concerns and focusing on the things that matter most to them.

The cost of living crisis, the sewage scandal, and most of all the NHS and care.

We must repay their trust by doing exactly what we said we would do.

Working hard for our communities, all year round.

Bridget Phillipson, the education secretary, has released an open letter to teachers and others in the education workforce saying she wants a “reset” in their relations with central government.

In response, the teaching union, the National Education Union (NEU), has urged to address the issue of the 2024/5 teachers’ pay offer which is still outstanding.

NEU members took part in a series of national strikes over pay last year, which were called off when the government made an improved offer of 6.5%. The leadership has warned the new administration that teachers in England and Wales could go on strike again if their demands for a fully funded, above-inflation pay rise are not met.

Daniel Kebede, the NEU general secretary, said:

We are looking forward to starting a journey of renewal with government, and to meeting Bridget Phillipson formally in her new role as education secretary.

The pay issue is on her desk. It was a complete abdication of [former education secretary] Gillian Keegan’s duty not to publish the school teachers review body report [which makes pay recommendations]. We need to know what teachers are being offered this year, and head teachers must be able to plan budgets.

The teacher recruitment and retention crisis is deep and severe. Workload is an enormous challenge too – teaching is simply not compatible with family life any more.

The NEU will be asking the new secretary of state to establish an independent commission into recruitment and retention that could make recommendations to restore the profession over the course of this parliament.

In her open letter to teachers, Phillipson said:

The scar of child poverty, severe financial pressures squeezing all your budgets, high workload, climbing vacancy rates, strain on care, mental health and SEND services, among many other issues, have made your jobs increasingly difficult.

This is a tough inheritance – none of these have quick and easy solutions but I will work with you and for you to find practical ways forward.

Keir Starmer has said Emily Thornberry has a “big part to play” in Labour after she said she revealed she was “very sorry and surprised” not to to be made attorney general. (See 11.45am.)

Speaking to reporters in Wales, Starmer said:

I’m putting together a very strong team based on delivering.

We got a very strong mandate at the general election, a mandate for change, a mandate for doing politics differently, and about service. That’s why I’m putting my team together.

Emily Thornberry has been fantastic, she’s got a big part to play, as has every single one of my now 412 Labour MPs.

Nick Thomas-Symonds is, in effect, the next Brexit minister. Officially his title is “minister for the constitution and European relations”, but he is based in the Cabinet Office, not the Foreign Office, and “European relations” these days means resolving post-Brexit trade issues. He posted this on X after a call with Maroš Šefčovič, the European commission vice-president who serves as the EU’s lead negotiator with the UK on Brexit matters.

Good to speak to @MarosSefcovic and discuss the importance of the unique partnership between the UK and EU.

We agreed to meet soon to discuss how we can strengthen co-operation and reset the relationship.

Energy secretary Ed Miliband has written to his departmental staff, outlining Labour’s energy strategy for the years ahead.

Cutting bills features heavily in the note he wrote to colleagues in the Department for energy security and net zero (Desnz). Miliband said:

The reason I’m so excited to have been appointed to this role is because it speaks directly to the twin passions that continue to motivate me. First, resolving the economic inequality that scars the country, and second tackling the climate crisis that imperils our world.

He added that the department is at the “heart of the government’s agenda” and this rings true; publicly owned energy company GB energy is one of the main policies campaigned on during the general election campaign, and one of the government’s first actions was ending the onshore wind ban.

Miliband said:

Families and businesses across the country are still struggling with energy bills that are too high and are expected to rise again in the autumn. In an unstable world, the only way to guarantee our energy security and cut bills permanently is to speed up the transition away from fossil fuels and towards homegrown clean energy.

He also laid out his priorities for the department, which are: “delivering our mission to boost energy independence and cutting bills through clean power by 2030; taking back control of our energy with Great British Energy; upgrading Britain’s homes and cutting fuel poverty through our warm homes plan; standing up for consumers by reforming our energy system; creating good jobs in Britain’s industrial heartlands, including a just transition for the industries based in the North Sea; and leading on international climate action, based on our domestic achievements.”

Miilband added that he was Labour’s energy secretary from 2008-10, so helming Desnz “feels like coming home”.

Several newly elected Labour MPs have criticised the reliability of train services after suffering disruption during journeys to take their seats in the House of Commons, PA Media reports.

This is from Paul Foster, the MP for South Ribble.

This is from Claire Hughes, MP for Bangor Aberconwy.

Andrew Ranger, MP for Wrexham, posted this reply to Hughes.

Avanti was not the only service to let new MPs down. This is from Josh Fenton-Glynn, MP for Calder Valley.

This is from Kirith Entwistle from Bolton North East.

And this is what Henry Tufnell, MP for Mid and South Pembrokeshire, posted on X yesterday.

The Centre for Policy Studies is not the only rightwing, free market thinktank that has welcomed Rachel Reeves’ speech. (See 1.38pm.) The Institute for Economic Affairs, which was Liz Truss’ favourite thinktank, is also enthused by the plan to ease planning restrictions (although it would like Reeves to go further). It has released a statement saying:

Rachel Reeves is right to emphasise the importance of growth in tackling Britain’s challenges. Everything from funding public services to a higher quality of life is possible with more growth.

Undoubtedly, the most exciting part of the agenda is the government’s immediate plans to reform the planning system, including restoring housing targets, cutting red tape for major projects and ending the de facto ban on the on-shore wind. The emphasis on using powers to promote growth could unlock major opportunities. But this must be the floor, not the ceiling, of the government’s ambitions. Far more reform will necessary to be done to solve the housing crisis.

And the Adam Smith Institute also says Reeves is heading in the right direction.

It has been harder to find reaction to the speech from leftwing thinktanks. But the New Economics Foundation has issued a statement criticising Reeves’ decision to rule out raising money for the Treasury by cutting interest payments paid to banks that hold money with the Bank of England (see 11.05am). Hannah Peaker, director of policy at the NEF, said:

If we want to see decent growth again, our new government can’t be afraid to spend. A new government has plenty of ways to raise money, from borrowing responsibly to taxing the wealthiest to scrapping stealth subsidies to banks.

Remaining wedded to outdated and arbitrary fiscal rules will hold our economy back. Our fiscal rules aren’t an accurate measure of how much a government can responsibly borrow — and the chancellor could choose to replace them with the wave of a pen.

The Greens have celebrated their election haul of four MPs with a joint photoshoot opposite parliament, promising to put pressure on Labour in areas including the environment, housing and wealth taxes.

Carla Denyer, Adrian Ramsay, Siân Berry and Ellie Chowns hugged each other in delight as they arrived on College Green, having not seen each before the election, which saw the party win handsomely in all of the seats they had been targeting.

Berry had been the favourite to retake the Greens’ sole previous seat of Brighton Pavilion, held by the now-departed Caroline Lucas since 2010, while Denyer, one of the co-leaders, had been tipped to win in the similarly urban-bohemian enclave of Bristol Central, where she ousted Labour’s Thangam Debbonaire.

But the party also won two more rural seats against primarily Conservative opposition: Ramsay, the other co-leader, in Waveney Valley, which straddles the Norfolk-Suffolk border, and Chowns in North Herefordshire.

Speaking to the Guardian after the photos, Denyer said winning all four seats had been seen as possible, but “it certainly wasn’t guaranteed”. She said: “Based on both polling and our own door knocking data, it was looking pretty close, right up to the last minute.”

One impact of moving from one to four MPs is that the Greens will, for the first time, need a party whip, Denyer said.

The Green party is a bit different in that we don’t whip our members on how they vote. But we still need that role to do inter-party negotiations about who gets to sit on which committee. So having a discussion about who gets that role is one of the things on the to-do list for this week, alongside getting a password to get how to connect to the wifi and all that normal first day at work stuff.

Asked what areas she hoped to pressure the Labour government on, Denyer said for her this included the climate, housing – “a massive issue”, she said, in her constituency – and better funding for public services, such as introducing wealth-based taxes, ruled out by Labour. She said:

It’s been disappointing to see Rachel Reeves already today repeating the, ‘There’s no magic money tree’ line when Labour have completely refused to consider ways that they could raise funds that would allow us to properly fund our public services.

Here is more from Robert Colvile from the Centre for Policy Studies on the Rachel Reeves’ speech.

Small bit of Kremlinology – worth noting that it’s Reeves who has announced the housing/planning stuff. Not that Rayner isn’t on board, but this is very clearly a core Treasury priority in a way that greatly amplifies its salience within Whitehall.

And this is from Ed Conway from Sky.

Also worth noting Rayner, Miliband, Reynolds, Kyle and others were there in the front row for the announcement this morning.That “united front” was one of the main things biz leaders who went along were remarking on afterwards


Updated: Juli 8, 2024 — 3:37 pm

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