Rachel Reeves admitted Britain ‘can do better’ today as she unveiled a ‘Thatcher-style’ emergency growth package.
In a desperate bid to kick-start the stalling economy, the Chancellor is backing a range of projects in a keynote speech.
She acknowledged that people had been struggling with the cost of living, and there had been a problem with ‘decline’ in the UK.
Ms Reeves also nodded to business fury at her national insurance raid, saying there were ‘costs to responsibility’ but the ‘costs of irresponsibility would be much higher’.
Blaming other politicians for lacking the ‘courage’ to prioritise growth, Ms Reeves insisted she was ready to ‘fight’ for it.
Airport expansion – including support for the long-mooted third runway at Heathrow – and creating ‘Europe’s Silicon Valley’ in the Oxford-Cambridge corridor are among the initiatives.
Meanwhile, Keir Starmer invoked the Tory doyenne’s 1980s drive to deregulate the City as he pledged to slash red tape – saying it could have a similar impact on the country’s fortunes.
However, critics have voiced extreme scepticism about the sudden focus on growth measures – with Labour’s huge Budget tax raid and workers’ rights overhaul blamed for crushing confidence.
Business chiefs pointed out it had taken the government seven months to bring forward plans, while Donald Trump had acted within seven days.
Chancellor Rachel Reeves is to back a range of projects designed to kick-start activity in a keynote speech this morning
Airport expansion – including support for the long-mooted third runway at Heathrow (pictured) – and creating ‘Europe’s Silicon Valley’ in the Oxford-Cambridge corridor are among the initiatives
An artist’s impression of how the Heathrow site could look after expansion
Protests against airport expansion were taking place outside the speech today
Speaking at a Siemens plant in Oxfordshire, Ms Reeves said: ‘We have fundamental strengths in our history, in our language and in our legal system to compete in a global economy, but for too long that potential has been held back. For too long we have accepted low expectations and accepted decline.
‘We no longer have to do that. We can do so much better. Low growth is not our destiny, but growth will not come without a fight, without a Government willing to take the right decisions now to change our country’s future for the better.
‘That’s what our plan for change is all about. That is what drives me as Chancellor.’
Ms Reeves complained that UK productivity had lagged behind major rivals.
‘The productive capacity of the UK economy has become far too weak,’ she said.
‘Productivity, the driver of living standards, has grown more slowly here than in countries like Germany or the US. The supply side of our economy has suffered due to chronic under-investment and stifling and unpredictable regulation, not helped by the shocks that we have faced in recent years.
‘For too long, politicians have lacked the courage or the strength to confront these challenges.
‘When presented with a choice, they have not prioritised growth. Instead, they have accepted the status quo and they have been the barrier, not the enablers of change.’
Environment Secretary Steve Reed, Transport Secretary Heidi Alexander and science minister Lord Vallance were in the audience for the speech.
The Chancellor is expected to confirm funding towards an East-West Rail link between Oxford and Milton Keynes, and an upgrade to the road linking the Buckinghamshire city to Cambridge.
Ms Reeves is set to accelerate the development of a new East Coast Mainline station in Tempsford, Bedfordshire, as well as backing for the development of new towns along the Oxford-Cambridge corridor.
She will also announce that the Environment Agency has lifted its objections to a new development around Cambridge with 4,500 new homes, as well as office and laboratory space in Cambridge City Centre.
A new ‘Growth Commission for Oxford’ to review how to accelerate growth will be launched, and Sir Patrick Vallance will be appointed as ‘Oxford-Cambridge Growth Corridor Champion’.
The emphasis on the Oxford-Cambridge region marks a shift away from the Tories‘ ‘levelling up’ agenda, in which resources were directed to the ‘left behind places’ in a bid to emulate the levels of prosperity and opportunity in London and the south east.
Ms Reeves argued that the proposals can add £78 billion to the UK economy by 2035.
‘Just 66 miles apart these cities are home to two of the best universities in the world, two of the most intensive innovation clusters in the world and the area is a hub for globally renowned science and technology firms in life sciences, manufacturing, and AI,’ she will say.
‘It has the potential to be Europe’s Silicon Valley. The home of British innovation.
‘To grow, these world-class companies need world-class talent who should be able to get to work quickly and find somewhere to live in the local area. But to get from Oxford to Cambridge by train takes two and a half hours.
‘There is no way to commute directly from towns like Bedford and Milton Keynes to Cambridge by rail. And there is a lack of affordable housing across the region.
‘Oxford and Cambridge are two of the least affordable cities in the UK. In other words, the demand is there but there are far too many supply side constraints on economic growth in the region.’
Ms Reeves will champion a regeneration project around Manchester United’s Old Trafford stadium, which the government claims will lead to new housing, commercial and public spaces.
And she is expected to endorse a third runway at Heathrow, as well as expansion at Gatwick and Luton – although it will take many years for those developments to happen, if they do.
Writing in The Times, Sir Keir said:’ ‘There is a morass of regulation that effectively bans billions of pounds more of investment from flowing into Britain.
‘Thickets of red tape that, for all the Tories talked a good game, was allowed to spread through the British economy like Japanese knotweed.’
He added: ‘In the 1980s, the Thatcher government deregulated finance capital. In the New Labour era, globalisation increased the opportunities for trade. This is our equivalent.’
The PM has introduced a new ‘growth test’ that will mean policies are vetoed unless the can be shown to boost the economy.
But despite this, No 10 confirmed a string of damaging policies – including its £25billion National Insurance raid – will still go ahead, leading critics to urge ministers to ‘unblock the barriers to growth they have created themselves’, including the Chancellor’s ‘job tax’, Angela Rayner’s workers’ rights charter and Environment Secretary Ed Miliband’s ban on new oil and gas exploration in the North Sea – all of which will continue to go ahead.
But shadow business spokesman Andrew Griffith said: ‘Labour talk a big game on cutting red tape whilst simultaneously piling on more environmental regulations and propose their job-destroying Employment Bill. They must support, not punish, those who do the right thing.
‘Businesses and high streets are bleeding out right now… Only business creates jobs and growth in the economy. It would serve Labour well to learn this basic lesson.’
Tom Behan, founder of sports clothing firm Castore, said the business climate is ‘incredibly challenging’ and ‘concrete plans’ were needed to get confidence back.
He complained that up to now the government had been lacking ‘clarity and leadership’.
‘It still very much feels that we’re at the stage of hearing words rather than actions,’ Mr Behan told BBC Radio 4’s Today programme.
‘Businesses in the UK are currently operating under the highest tax burden I think in history.
Keir Starmer invoked the Tory doyenne’s 1980s drive to deregulate the City as he pledged to slash red tape – saying it could have a similar impact on the country’s fortunes
He said ministers had to be ‘honest’ about trade- offs between growth, the environment and workers’ rights.
‘In my opinion the government need to be very honest with themselves first and foremost and then very honest with the electorate about the difficult decisions that they need to make,’ he said.
‘Look at the US. They’ve got a president that’s been in place not much more than seven days and they’ve found a deal to invest $500billion in AI infrastructure.
In the UK we’ve got a government that have been in place over seven months and have just decided in the last couple of days that maybe we need to start thinking and talking about growth.’
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