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Rachel Reeves has said Labour’s economic inheritance is the worst since the Second World War and ordered civil servants to compile a dossier on the state of the economy after 14 years of Conservative rule.
The chancellor said she had repeatedly warned about the dire state of the public finances during the general election, and “what I have seen in the past 72 hours has only confirmed that”.
“Our economy has been held back by decisions deferred and decisions delayed… political self-interest put ahead of the national interest,” Ms Reeves said at her first press conference as chancellor.
She added: “That is why, over the weekend, I instructed Treasury officials to provide an assessment of the state of our spending inheritance so I can understand the full scale of the challenge.”
The UK’s first female chancellor, Ms Reeves promised to publish the dossier before parliament breaks for the summer, expected at the end of July.
She said the publication will be separate from her first budget, but declined to say when the budget would be held.
As an example, Ms Reeves said: “Had the UK grown at just the average rate of other advanced economies over the last 14 years, our economy would be over £130bn larger, which could have brought in an additional £58bn in tax revenues in the last year alone.
“That is money that could have helped revitalise our schools, our hospitals and other hard choices.”
It appeared to be the first steps toward Labour’s first budget in charge, when experts have warned the party will have to plug an £18bn hole in the public finances through either tax hikes or spending cuts. Both Sir Keir Starmer and Ms Reeves dodged questions about the shortfall in government spending plans on the campaign trail, promising that an uptick in economic growth would be enough to balance the books.
On Monday, Ms Reeves addressed a room of business leaders from some of Britain’s most pioneering industries as well as deputy prime minister Angela Rayner, energy secretary Ed Miliband and chief Treasury secretary Darren Jones.
Outlining how Labour would boost growth, she promised to review greenbelt boundaries to prioritise brownfield and so-called grey belt land to meet housebuilding targets, which she said would include affordable housing and housing for social rent.
Ms Reeves said the Labour government would also update the National Policy Planning Framework to undo changes made by the Conservatives, including restoring mandatory housing targets.
And, in the party’s first major shakeup since taking power, it immediately scrapped the de facto ban on onshore wind in England which has been in place since 2015.
Ms Reeves also said Labour would consult on whether to class onshore wind as nationally significant infrastructure, which would let large farms get quick approval. “We will get Britain building again… we will get Britain growing again,” she vowed.
"We must acknowledge that trade-offs always exist. Any development may have environmental consequences, place pressure on services and rouse voices of local opposition, but we will not succumb to a status quo which responds to the existence of trade-offs by always saying no," Ms Reeves said.
She also said in her speech that Labour will not use its large majority to renege on its tax promises.
The chancellor said: "Over the weekend, I made clear to Treasury officials that the manifesto commitments that we were elected on will be kept safe and they will be delivered on.
"That includes robust fiscal rules and it includes our commitments to no increases in national insurance and the basic, higher or additional rates of income tax or VAT."
