UK FinMin vows no return to austerity despite stringent budget

British Finance Minister Rachel Reeves announced on Monday that there will be no return to austerity or widespread cuts, with promises of long-term growth, despite earlier warnings of a challenging budget aimed at stabilisng the economy.

Adopting a more positive tone after weeks of cautioning Britons about economic difficulties, expressed optimism about Britain’s future, Reeves acknowledged the need for hard work. Following Labour’s landslide election victory in July, the minister indicated that taxes might hike in her first budget on October 30 to address a £22 billion ($29 billion) deficit in public finances.

She also confirmed that millions of pensioners would no longer receive winter fuel payments, a decision the government asserted it did not want to take and one which widely criticised by trade unions and traditional Labour supporters. Speaking at the Labour Party conference in Liverpool, Reeves emphasised her commitment to stability for businesses and families.

“There will be no return to austerity. Conservative austerity was a destructive choice for our public services – and for investment and growth too,” Reeves, referring to the previous ruling party, according to extracts from her speech.

“We must deal with the Tory (Conservative) legacy and that means tough decisions. But we won’t let that dim our ambition for Britain.”

Reeves assured that avoiding austerity would mean increased public spending under Labour. “This budget will focus on protecting living standards, fixing the National Health Service, and rebuilding Britain, because we can’t keep cutting investment spending,” she told Times Radio.

Uneasy Choices

Reeves and Prime Minister Keir Starmer have faced criticism for their pessimistic economic outlook, which, along with a controversy over donations, has overshadowed Labour’s first election win in 14 years. A recent survey linked a plunge in consumer confidence to this gloomy perspective.

Reeves announced the appointment of a COVID corruption commissioner to investigate over £650 million worth of contracts awarded by the previous government during the pandemic, amid allegations of favouritism and unusable personal protection equipment.

“I have never been so optimistic about our country’s future. If we get this right, there is no end to what we can achieve,” she told Sky News.

The minister reiterated Labour’s manifesto commitments not to raise income tax, National Insurance, VAT, and corporation tax. She also defended the “difficult” decision to cut winter fuel payments for some pensioners, despite criticism following revelations that senior ministers had received donations for personal expenses.

Reeves clarified that she had used donations for campaign-related expenses but assured that, in government, she would no longer accept such contributions for personal use.

Attribution: Reuters

Subediting: M. S. Salama