Labour was tonight urged to stop ‘punishing’ business with anti-growth measures as it launched its latest bid to revive the economy.
In a major speech tomorrow, Chancellor Rachel Reeves will insist she is ready to move ‘further and faster’ in pursuit of growth.
The Prime Minister revealed a new ‘growth test’ will be implemented to evaluate whether proposed measures will benefit the economy before being approved.
Despite this, No 10 verified that several controversial policies, such as the £25 billion National Insurance increase, will proceed, prompting critics to call for the removal of obstacles to growth created by the government itself. These obstacles include the Chancellor’s tax on jobs, Angela Rayner’s labor rights initiative, and Environment Secretary Ed Miliband’s restriction on new oil and gas exploration in the North Sea.
Andrew Griffith, the Shadow business spokesperson, criticized Labour for advocating reductions in bureaucracy while introducing additional environmental regulations and the potentially job-threatening Employment Bill. He emphasized the need to support rather than penalize those who act in accordance with regulations.
‘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.’
In her speech in Oxfordshire tomorrow, the Chancellor will say she is ready to prioritise growth by tearing up planning rules, curbing regulation and taking on the ‘blockers’. She will insist that low growth ‘is not our destiny’, while warning it ‘will not come without a fight’.
Britain is a country of ‘huge potential’ with the ‘fundamental strengths’ to ‘compete in a global economy’, she will add.
Keir Starmer will announce he is introducing a new ‘growth test’ that will mean measures are vetoed unless it can be shown they will boost the economy
In a major speech, Chancellor Rachel Reeves will insist she is ready to move ‘further and faster’ in pursuit of growth
The Chancellor will also announce plans for a new Oxford-Cambridge growth corridor, including thousands of new homes, improved transport links and a new hospital focused on cancer research.
It comes after Sir Keir Starmer told a meeting of business chiefs that Cabinet ministers would be directed to make growth their top priority, saying he was ‘hard-wiring growth into all the decisions of the Cabinet’ with a new growth test.
‘When you’re answering the question, “should we do X, or should we do Y”, that is guided by the mission,’ he said.
‘Should we do X? If it’s good for growth, good for wealth creation, the answer is “yes”. If it’s not then the answer is “no”.’
But No 10 later acknowledged the test would not necessarily block all policies that harm growth.
Sir Keir’s spokesman said: ‘The decision-making will continue to be for the Cabinet; we are not going to pre-empt Government decision-making. The point is the growth impact, the growth credentials, must be presented – much like public spending implications must be presented – such that in reaching collective agreement it is very clear what the impact of those decisions will be on growth.’
The spokesman denied Labour is sending mixed messages on issues such as deregulation, but confirmed Ms Rayner will press ahead with the 150-page Employment Rights Bill, which by the Government’s own assessment will cost business up to £5billion a year.
And the punishing raid on employers’ NI will also go ahead in April, as will a rise in stamp duty and other measures such as a rise in the minimum wage and curbs on junk food advertising.
Keir Starmer told a meeting of business chiefs that Cabinet ministers would be directed to make growth their top priority
Shadow chancellor Mel Stride said Labour’s gloomy talk and record tax-raising Budget had ‘killed growth stone dead
Tom Clougherty, of the Institute of Economic Affairs, welcomed the change in Labour’s rhetoric towards a focus on growth, but said it now needed to be matched with a change of direction.
‘We need to stop saying that economic growth is the priority and then putting other objectives first,’ he said.
‘The big question is whether this will lead to a fundamental reassessment of parts of the Government’s agenda.
‘It is all very well to say that growth is the priority, and that all policies will be assessed for their impact on growth, but if we still press ahead with heavy-handed employment rules, economically-destructive environmental policies, and damaging taxes on businesses, the commitment doesn’t mean very much.’
Shadow chancellor Mel Stride said Labour’s gloomy talk and record tax-raising Budget had ‘killed growth stone dead’.
He added: ‘The biggest barriers to growth in this country are Rachel Reeves, Keir Starmer, and their job destroying budget.
CBI chief Rain Newton Smith has welcomed the Chancellor’s recent change of tone but said it was now ‘crunch time for growth’
Sir Keir Starmer (centre) and Chancellor Rachel Reeves (second right) during a business meeting with top executives from some of Britain’s major businesses
‘Hastily cobbled together announcements of growth in the 2030s will do nothing to help the businesses cutting jobs right now because of Labour’s punishing jobs tax, the companies being crushed under their barrage of new regulations, or the farmers facing bankruptcy over the cruel family farm tax.’
CBI chief Rain Newton Smith welcomed the Chancellor’s change of tone but said it was now ‘crunch time for growth’.
‘A relentless focus on growth means making some bold moves, accepting trade-offs and taking risks,’ she said.
‘Businesses were in need of a boost in confidence after a tough period that has seen their overheads increase and headroom for investment squeezed. Firms in the everyday economy will need to stay front and centre of government decisions to create the jobs, investment and growth we all want.’
