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Labour Conference: Rachel Reeves blasts Tory economic plans as pound nears parity

Rachel Reeves, shadow chancellor of the exchequer speaks on day two of the Labour Party Conference at the ACC on 26 September. Photo: Christopher Furlong/Getty
Rachel Reeves, shadow chancellor of the exchequer speaks on day two of the Labour Party Conference at the ACC on 26 September. Photo: Christopher Furlong/Getty

Rachel Reeves has criticised the government's approach to growing the UK economy as the nation faces a national crisis with soaring energy bills and food prices.

Delivering her keynote speech to delegates at the Labour party conference in Liverpool on Monday, the Labour MP slammed chancellor Kwasi Kwarteng and prime minister Liz Truss's economic policies.

Read more: Kwasi Kwarteng announces biggest tax cuts since 1972 in UK growth push

The shadow chancellor said the Tories had unveiled six different economic growth plans in the last 12 years, something which now amounts to a "library of failure".

She promised to hike minimum wage to reflect the cost of living on her first day as chancellor, if elected, and confirmed plans for a wealth fund to invest in British business.

Here's what she announced:

Minimum wage

Reeves pledged to guarantee a minimum wage that "reflects the real cost of living" if she becomes chancellor, adding that the government’s "ideology" has "nothing" to offer workers "beyond longer hours, lower pay and less respect".

She said: "On day one as chancellor, I will write to the Low Pay Commission with a simple instruction: that the minimum wage will be set at a level that reflects the real cost of living.

“The last Labour government delivered Britain’s first national minimum wage.

"The next Labour government will introduce a genuine living wage. That’s how we will give working people respect, that’s how we will give working people security and that’s how we will grow our economy too."

The party will need to set out its sum on how it will fund the plan, which could turn out to be a potentially very-expensive policy as it is currently totally open-ended and un-defined.

Read more: Pound crashes to all-time low against dollar as Kwarteng signals more tax cuts

Wealth fund

Reeves claimed Labour’s green prosperity plan is about UK economic growth, as she said that blades for the largest offshore wind farm in Scotland are made thousands of miles away.

"We have the ability, but we want the jobs here, we want the factories here and we want British businesses to take the lead," she added.

Reeves confirmed the plan for a Labour government to establish a national wealth fund in a bid to invest in new industries, including electric battery factories, offshore wind and others.

"That is a real plan for the climate. That is a real plan for growth. And that is a real plan for levelling up," she said. "A zero-carbon economy – made right here, made in Britain."

Watch: Rachel Reeves accuses government of ‘energy disarmament’

Income tax

Reeves has vowed to reinstate the 45p additional rate of income tax, that Kwarteng scrapped in Friday's mini-budget.

She said: "I can tell you with a Labour government those at the top will pay their fair share. The 45p top rate of income tax is coming back."

The Labour MP said that the money would be used to "implement the biggest expansion of medical school places in British history, doubling the number of medical students, so our NHS has the doctors it needs".

Energy

She accused Truss of being content to let energy firms "pocket the cash" as households struggle with the cost of living.

Reeves told conference delegates that she will be the first "green chancellor" and accused the Tories of "energy disarmament".

Addressing energy, she said: "A proper windfall tax would mean that working people didn’t have to foot the bill."

"The prime minister is content to let energy giants pocket the cash and leave your children and your grandchildren to pick up the tab," she said. "Under these Tories, those with the broadest shoulders carry the lightest load. And not by accident, but by choice. It is time for a government that is on your side."

Watch: Reeves hits out at ‘reckless’ mini-budget as pound slumps

Economy

The Labour MP told the conference, that the government has "replaced levelling up with "trickle-down economics — an idea that has been tried, has been tested, and has failed."

She added that wealth "doesn't trickle from the top down, it comes from the bottom up and the middle out, from the talents and the efforts of tens of millions of ordinary people and from thousands of businesses".

The shadow chancellor said the Conservative Party has overseen "12 years of failure" on the economy, with growth having stalled.

Read more: Plunging pound may force Bank of England to raise interest rates to 3.25%

Pound

Labour thinks the government is borrowing far too much — and that is fanning the flames when it comes to the fall in the pound, Reeves said.

Reeves said that the message from financial markets was "clear" on Friday. Today [Monday] that message is "even more stark".

Reeves accused Kwarteng of having "fanned the flames" of the falling pound by hinting at additional "unfunded" tax cuts.

The Labour MP told BBC Radio Four’s Today programme: "It is incredibly concerning," she told BBC Radio Four’s Today programme. "I think many people had hoped over the weekend things would calm down but I do think the chancellor sort of fanned the flames on Sunday in suggesting there may be more stimulus, more unfunded tax cuts, which has resulted overnight in the pound falling to an all-time low against the dollar."

Read more: Mini-budget: 'Trussonomics' baffles investors as bonds and pound tank

The pound plunged to an all-time low against the dollar after Kwarteng unveiled the biggest tax cuts in 50 years and signalled more were on the way.

Sterling hit its lowest level since decimalisation in 1971, falling nearly 5% to $1.03 in overnight trading before it regained some ground to about 1.07 dollars on Monday.

Economist have warned the currency could fall below parity with the dollar if Bank of England governor Andrew Bailey fails to intervene to shore up the currency.

Traders are now betting that Threadneedle Street will step in with an emergency interest rate rise to help support the currency.

But Samuel Tombs at Pantheon Macroeconomics warned sterling will weaken further if Bailey fails to act, adding: "I expect he’ll dither".

Viraj Patel, an FX analyst, said: "My sense is the markets want Bank of England action in the next few days… If we don’t get that then I fear for how low the pound can go (cable at parity is not a floor.)"

Watch: Labour urges investigation into "leak" of mini-budget after hedge funds shorted the pound