UK’s Reeves to Unveil Labour’s Growth Plan in First Speech

Joe Mayes and Alex Wickham
·4-min read

(Bloomberg) -- Rachel Reeves will lay out the new Labour government’s plans to spur private investment in her first major speech as Chancellor of the Exchequer on Monday, as the party tries to ride the momentum of its landslide UK election win last week in a dash for economic growth.

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There is “no time to waste” in lifting Britain’s growth rate, Reeves will tell business leaders in central London, pledging to “fix the foundations” of the UK economy, according to remarks sent in advance by the Treasury.

Reeves’s plan is based on crowding in billions of pounds of private investment by creating new financial instruments to stimulate demand from institutional investors, Bloomberg reported before the election. For months, Reeves has been working to spark investors’ interest in projects in areas including green energy, house-building and infrastructure.

Reeves will set out more details on Monday, according to the Treasury statement. They’re due to include bringing back mandatory house-building targets and a blitz of planning reforms to encourage construction.

“What we want is for infrastructure to be built, housing to be built, the energy system to be more sustainable,” Reeves’s deputy, Darren Jones, said on BBC TV on Monday. “Our key focus is on speeding up the planning system.”

Labour leader Keir Starmer has said lifting growth would mean his government wouldn’t have to hike taxes or cut public spending to balance the books. To be sure, economists doubt Labour will be able to do it quickly enough to avoid difficult decisions on tax and spending in their first budget in the autumn, where they’re forecast to face a £20 billion ($26 billion) fiscal hole.

Former governor of the Bank of England Mark Carney has been leading a task force advising Reeves on the creation of a national wealth fund. The group includes Aviva CEO Amanda Blanc and Barclays chief executive CS Venkatakrishnan, and will report its findings on Tuesday, according to a person familiar with the matter. Carney is the chair of Bloomberg Inc.’s board.

The focus on private funds harks back to the last Labour government in the late 1990s and early 2000s, when private finance initiatives and public-private partnerships were expanded under Tony Blair and Gordon Brown. Those so-called PFI projects came to be seen as highly controversial because of questions over their value for money, the quality of privately delivered projects and arrangements used to keep debt off the government’s balance sheet.

Labour has also said it will stage a global investment summit in its first 100 days in office, and has been holding meetings with what it calls its British Infrastructure Council to discuss with UK-based and international investment firms how it can unlock private capital. Attendees of the meetings have included representatives from BlackRock, Lloyds Banking Group, Santander, HSBC, Phoenix Group and Fidelity International, among others.

“We want investors to come alongside that government money,” Starmer said before the July 4 election. “We’ve been talking to global investors for the best part of two years, saying that if we put down this money set out in our manifesto, if you come alongside it and put down many more billions of pounds, so that in partnership with the government we can make the changes we need.”

Reeves’s economic pitch follows a busy weekend for Starmer’s team as it tries to convey a sense of urgency since the election. Over the weekend:

  • Defense Secretary John Healey announced extra military aid for Ukraine

  • Starmer visited Scotland in first part of a UK-wide tour

  • Starmer said he wants to improve UK’s ties with the European Union

  • Business Secretary Jonathan Reynolds said he and Starmer had spoken to Tata Steel over its plan to shut down blast furnaces in south Wales, and that government aid would be contingent on job guarantees

  • Health Secretary Wes Streeting said he would meet junior doctors early this week to discuss the end of strike action, and the British Dental Association to start addressing problems in dentistry

  • Education Secretary Bridget Phillipson said she would reset the relationship the education sector and push to recruit 6,500 new teachers

Starmer this week will head to Washington for the annual summit of the North Atlantic Treaty Organization, giving him a chance to meet face-to-face with world leaders including US President Joe Biden, Ukraine’s Volodymyr Zelenskiy and Emmanuel Macron of France for the first time as prime minister.

Parliament returns Tuesday with hundreds of new Labour MPs taking their seats.

(Updates with quote from Labour’s Reynolds in fifth paragraph.)

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