“If we delay, we risk further entrenching the barriers to growth that have held our country back for too long. We say this upcoming budget is the time to grasp the opportunity before us and act with conviction.”
While the letter from the group is a show of support from loyalists, it also reflects fears among some in Labour’s ranks that Reeves may opt for a less ambitious change such as excluding Bank of England losses from debt calculations, freeing up between £10bn and £20bn. MPs also want immediate action on investment that will deliver tangible benefits by the next election.
While some in Whitehall are concerned about frightening the markets with extra borrowing, figures close to the chancellor say that there is plenty of scope for a change and that the new rules would provide for a far more sensible amount of fiscal “headroom” that would help the government plan for the longer term.
Lucy Rigby, co-chair of the Labour Growth Group, said the government needed to “break the Tory doom loop of low investment, low productivity and low growth if we’re going to deliver the change our constituents want to see” in their communities. “There is no time to waste and that’s why we’re encouraging the chancellor today to be bold and ambitious in investing for growth in the coming budget,” she said.
Simons warned that the government’s fiscal framework had already become an “object of derision” among some economists. “It’s time we listen to them, to businesses and to investors, and make the government a serious partner for investment again,” he said.
Onwurah added: “After 14 years of Tory economic stagnation, economic growth is rightly the priority for this government – economic growth founded on a virtuous cycle of investment, innovation, productivity, good jobs and rising incomes – and that is the path toward a prosperous future that my constituents deserve, and which will put us in the forefront of the industries of the future.”
Reeves appears to be already committed to a rewriting of fiscal rules, though the final details of the budget have yet to be finalised.
In what would amount to more of a political gamble, she is considering the increase to employer national insurance.
That measure – either an increase to contributions or applying employer national insurance to pension contributions – could raise tens of billions, but will be labelled a “jobs tax” by the Conservatives.
