RACHEL REEVES backed the bond market today as the government’s confrontation with Manchester Mayor Andy Burnham over the economy and more continued to dominate Labour conference.
The Chancellor used her speech to delegates to slam as irresponsible Mr Burnham’s call to end the domination of debt speculators over the economy.
But there was no sign of the mayor backing down, as he intensified criticism of Sir Keir Starmer’s authoritarian party management regime.
No-one was in any doubt who Ms Reeves had in mind when she lashed out at “people who peddle the idea that we can just abandon economic responsibility, cast off any constraints on public spending. They’re wrong — dangerously so.”
Mr Burnham had advocated increasing government borrowing, in part to fund an expanded programme of public ownership of vital services. He also recommended taxing the rich more and the poor less.
But Ms Reeves was having none of it in a trenchant defence of Treasury economic orthodoxy.
Waving the shroud of Liz Truss, she said: “When spending gets out of control, when market confidence is lost, that doesn’t just show up in some OBR [Office for Budget Responsibility] reports and some difficult headlines a few months later.
“It is felt immediately in the growing cost of essentials, and rising interest rates. There is nothing progressive, nothing Labour, about government using £1 in every £10 of public money it spends on financing debt interest – billions of pounds every single year going towards repaying debt.”
The Chancellor did not significantly enlarge on plans for her November Budget, when tax rises — most likely affecting VAT — are widely expected, since the government’s drive for economic growth has yet to yield any results.
This sour medicine was sweetened by some commitments, both old and new, in Ms Reeves’s speech.
Among the old was the pledge to “push on” with the Northern Powerhouse Rail programme, while the new included a promise to establish a library in every school in the country.
She also won applause for telling delegates that the government was committed “to nothing less than the abolition of long-term youth unemployment.”
This was welcomed by TUC general secretary Paul Nowak, who also called for “sustained investment for our hospitals, schools and local councils.
“That’s why at the Budget the government should be asking those with the broadest shoulders, like banks and gambling companies, to pay their fair share.”
This call was backed by Unison leader Christine McAnea, who said: “It would have been good to hear the Chancellor make a commitment to raising money by taxing wealth, which could then be invested in essential public services.”
Such a plan was not heard, but Ms Reeves did promise to make it easier for young people to travel within the European Union, a matter the bond market has no view on.
For his part, Mr Burnham seemed in no mood for accommodating his critics and backing down in the face of what is now a concerted Downing Street operation to take him down.
“I’ve done nothing more than launch a debate,” he said at a fringe event.
“And what I would say to those who say that I’m speaking out purely for my own ambition, I am speaking out for the thousands of councillors here at this conference who are worried about going to those doorsteps next May.”
He said he was “speaking for the members of the Senedd who are working hard to keep Wales Labour. And members of the Scottish Parliament who want a stronger story about Labour to go to those doorsteps.
“I’m speaking out for the millions of good people around Britain who want a more hopeful direction for the country.”
Mr Burnham also lashed out at the “climate of fear” within the party, calling for more tolerance and debate.
He slammed the Starmer regime wherein “a party member is suspended for liking a tweet by another political party, or a member of Parliament loses the whip for trying to protect disability benefits” and dismissed calls for loyalty oaths.
Polling for ITV showed him runaway favourite among Labour members to replace Sir Keir if there was a vacancy, but admitted he can’t launch a leadership campaign.
“I’m not in Parliament, that is the bottom line,” he said at a Guardian event.
In all this, polling guru Sir John Curtice was asked if he saw any glimmers of hope for Labour. “No” was his answer.