by Rachel Reeves tried to strike her most optimistic tone yet about the future of the UK economy and insisted there would be “no turning back on austerity”.
Speaking at the Labor Party conference in Liverpool on Monday, the chancellor sought to shed much of the gloom and doom of past comments in which she warned of “difficult decisions” to take on the country’s public finances. set country.
Most notable among them is Labour’s decision to end winter fuel payments for around nine million pensioners, a policy criticized by campaigners and branded “cruel” by the head of the Unite union.
Reeves said: “There will be no return to austerity. Conservative austerity was a destructive choice for our public services – and for investment and growth too. We have to deal with the Tory legacy and that means tough decisions. But we will not let that dampen our ambition for Britain.”
Here are the key takeaways from Reeves’ speech that will stick with you:
Winter fuel allowance
What she said: “I have made the choice to make the winter fuel payment means-tested. There is no change to our position on winter fuel, we are still focusing on encouraging more people who should be eligible for credit pensions are affecting him, but the policy is still the same.”
One of the most controversial issues at the conference was the government’s decision to receive winter fuel payments for around nine million pensioners.
Reeves said: “I know that not everyone in this hall or in the country will agree with every decision I make. I will not fight those decisions. I thought it was the right decision in the circumstances we found ourselves with legacy. I didn’t take those decisions lightly.”
Reeves defended the move saying the triple lock will increase the state pension by around £1,700 during this parliament. She has previously said that pension credit – which will now be used to determine eligibility for winter fuel payments worth up to £300 – would be more widely accepted and that pension rises would cost the state income. Campaigners have warned that this will be too late for many this winter.
The unions demanded a U-turn on the policy, but a debate and non-binding vote on the reversal of the plan will now take place on Wednesday instead of Monday, angering some delegates. There were boos in the conference hall when the vote was postponed.
Reeves has blamed the financial situation of the government left by the Tories for making the change to winter fuel payments. “These changes were not what I expected to do or what I wanted to do,” she told the BBC on Monday morning.
Corporation tax
What she said: “We will cap corporation tax at the current level for the duration of this parliament.”
Companies currently pay 25% on profits over £250,000 and 19% on profits up to £50,000. The Universities and Colleges Union (UCU) has called on the Chancellor to raise corporation tax to help solve the university funding crisis, saying a 4.3% rise would raise £17bn.
However, Reeves ruled out introducing tax increases for UK businesses.
In her speech, she said: “I want small business owners to know that they can plan ahead, invest, expand, confident that they have a government that has their back and a tax system that will support them without penalty on them. And I want investors to see Britain as a stable place to invest – and yes, to make a profit.”
VAT, income tax and national insurance
What she said: “We will not increase the basic rates, the higher rates or the additional rates of income tax, national insurance or VAT.”
Reeves has promised to uphold Labour’s pre-election manifesto pledge to not raise national insurance, income tax or VAT, which will have a huge impact on the country’s workers.
However, the Institute for Fiscal Studies (IFS) think-tank has warned that this decision could leave the Chancellor needing extra revenue from “economically damaging” tax rises which only provide short-term relief.
There is speculation that revenue could come instead from increases in capital gains tax, inheritance tax and stamp duty on property sales.
Wealth taxes
What she said: “We will fight tax avoidance and tax evasion.”
Reeves has tried to distinguish between not raising taxes on workers but being prepared to tax those who Labor claimed should be paying more into the public purse.
The government is reportedly examining possible tax increases to raise revenue and is said to be considering an increase in capital gains tax, changes to inheritance tax and a reduction in pension tax relief for top earners in the October 30 budget.
In an interview published in the Sunday Times this weekend, Reeves rejected a new personal wealth tax, despite calls from the Unite trade union to introduce a 1% tax on people with £4 million or more.
And despite not mentioning it in her speech on Monday, Reeves said the government will expand the energy and profit levy on oil and gas producers to invest in indigenous energy, as well as eliminate non-domestic tax loopholes.
Free breakfast clubs in primary schools
What she said: “This will start in hundreds of schools for primary students from April, before the national rollout.”
Reeves confirmed that free breakfast clubs will start in some primary schools from April 2025.
This is the first step in a process she said will lead to a national rollout in every primary school in England.
Up to 750 primary schools will take part in the initial scheme, which will take place next year from April to July.
VAT on private school fees
What she said: “This government will introduce VAT on private school fees to invest in our state schools.”
Reeves reiterated her party’s manifesto pledge to introduce VAT on private school fees. This will be introduced from 1 January 2025 and parents cannot avoid the tax by paying fees in advance.
The plan is to use the additional revenue to invest in state schools, Reeves told the conference.
Some private schools have already started raising their fees in response to the policy, with reports that many parents are considering moving their children out of private schools and into state education.
