Chancellor Rachel Reeves to pledge no austerity despite 'tough decisions' - as Labour battles row over donations and freebies

Rachel Reeves will vow there will be "no return" to austerity under a Labour government as it continues to come under criticism in a row over donations.

Speaking at the party's conference in Liverpool later, the chancellor will say that her first budget, due on 30 October, will "rebuild Britain" and deliver the change people voted for at the election which awarded Labour its first election victory since 2005.

Ms Reeves will make her speech in the shadow of the row over donations accepted by the prime minister and a number of cabinet ministers - and against the backdrop of hostile briefings about Sir Keir Starmer's chief of staff, Sue Gray.

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The government has come under fire for projecting an image of "doom and gloom" and warning of a "painful" budget while seemingly accepting hundreds of thousands of pounds in gifts and donations from wealthy donors.

Earlier this week Sir Keir said he would no longer accept donations to pay for clothes, and neither would Ms Reeves or Deputy Prime Minister Angela Rayner.

'A budget to rebuild Britain'

The chancellor is expected to say: "There will be no return to austerity. Conservative austerity was a destructive choice for our public services - and for investment and growth too.

"We must deal with the Tory legacy and that means tough decisions. But we won't let that dim our ambition for Britain.

"So it will be a budget with real ambition. A budget to fix the foundations. A budget to deliver the change we promised. A budget to rebuild Britain."

Ms Reeves, who has been arguing that growth is the solution to the UK's economic woes, is also expected to signal a path towards further public investment, to assist in that aim.

The chancellor has defended making "tough decisions" - such as the one to strip most pensioners of their winter fuel payment - on the grounds that economic growth will come once the government has achieved economic stability.

One of her first acts as chancellor was to claim that her predecessors left a £22bn "black hole" in the public finances which Labour has been forced to fill.

Throughout the general election campaign, Labour pledged not to increase major taxes - national insurance, income tax and VAT - a promise she will make again in her speech today.

She will also say corporation tax is to remain at its "current level for the duration of this parliament".

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'Where is the plan?' - Hunt

Jeremy Hunt, the shadow chancellor, disputed Labour's assertion that the Conservatives had left the party with a dire economic legacy.

He claimed Ms Reeves had "already damaged the UK's international reputation by talking down her inheritance in order to score political points".

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"If she believes in growth, where is the plan? People are beginning to suspect there may not be one," Mr Hunt said.

"If all we get in the budget is tax rises and employment laws that deter investment and job creation she will have thrown away a golden opportunity."

Winter fuel cut battle looms

The Labour leadership faces a conference battle over its decision to strip winter fuel payments from 10 million pensioners as trade unions push for the policy to be reversed.

Union sources indicated the issue would be debated on the conference floor after Ms Reeves' speech, although a vote on the call for a reversal of the policy could be pushed back until later in the week.

Unite has already unveiled billboards around Liverpool with the slogan "Defend the winter fuel payment" and plans to stage a demonstration outside the conference centre ahead of the debate.

(c) Sky News 2024: Chancellor Rachel Reeves to pledge no austerity despite 'tough decisions' - as Labour battles row over donations and fr