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Rachel Reeves has instructed the Treasury to examine state spending under the previous Conservative government, warning that Britain’s new Labour administration had inherited “the worst set of circumstances since the second world war”.
The UK chancellor prepared the ground for tough choices on public finances this year as she vowed to prioritise growth and unveiled plans to unblock housing developments and onshore wind farms.
“We face a legacy of 14 years of chaos and economic irresponsibility,” Reeves said on Monday. “That is why over the weekend I instructed Treasury officials to provide an assessment of the state of our spending inheritance so that I can understand the full scale of the challenge.”
The Treasury analysis of the fiscal inheritance from Rishi Sunak’s Conservative government is due to be published before the summer recess later this month.
In an apparent reference to spending controls or tax rises, she added that the review would pave the way for “difficult choices” in an autumn Budget, the date of which will also be announced before MPs head off for their summer break.
Reeves said that what she had “seen in the past 72 hours” had “only confirmed” her previous warnings “that whoever won the general election would inherit the worst set of circumstances since the second world war”.
In her first major speech since being appointed by Sir Keir Starmer following Labour’s landslide election win last week, the chancellor declared the UK now had a “stable government” that would work with business and pledged to make the country a “safe haven” for investment.
Her bid to boost growth would entail reforming the UK’s sclerotic planning system, Reeves said, adding that her party had been “elected on a mandate to get things done and to get Britain building again”.
She reiterated Labour’s target for building 1.5mn new homes over the next five years, teeing up measures including reform to the National Planning Policy Framework by the end of the month.
Mandatory housing targets would be restored and the de-facto ban on onshore wind farms in England had been ended, Reeves said.
Among the measures set out by Reeves is an attempt to unblock “stalled sites” of large housing schemes stuck in mid-development. The government had already decided to intervene on two planning appeals for data centres in Buckinghamshire and in Hertfordshire, she said.
The government will also kick-start reviews of the boundaries of the green belts that encircle big cities, as it seeks to permit more building on brownfield and “grey belt” land. Reeves pledged to end prevarication on planning decisions, saying: “We will not succumb to a status quo that responds to the existence of trade-offs by always saying no.”
Neil Jefferson, chief executive of the Home Builders’ Federation, welcomed the return of housing targets for local government. “We can only build if we plan effectively and if councils take responsibility for the housing needs of their communities,” he said.
But Jefferson said the government also needed to unblock 160,000 homes held up by environmental regulations and support buyers of new homes to encourage more building.
Reeves added that she had received a report from former Bank of England governor Mark Carney on how to implement Labour’s plans for a new £7.3bn national wealth fund to pump money into growing industries, and that the next steps would be announced in short order.
Asked about ways of reducing burdens on the public finances, Reeves said she had “no intention” of changing to the way the Bank of England pays interest on commercial banks’ reserves. There had been suggestions that interest rates could be cut on tiers of the reserves to release more cash for public spending.
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