A group of Labour MPs has urged Rachel Reeves to commit to changing fiscal rules in the upcoming Budget to invest in public services.
The Labour Growth Group, a pro-building pressure group of more than 80 MPs formed in July, sent a letter to the Chancellor saying that “public investment is the only way to restore our public realm” and “this upcoming Budget is the time to grasp the opportunity”.
Changing fiscal rules could unlock more than £50 billion for investment, according to the IPPR.
The letter reads: “We believe that we must now confront the debate about how public investment and private investment can work together effectively.
“Whether affordable housing or clean energy infrastructure, buildings or technology to make our NHS and schools better and more productive, or transport infrastructure connecting our towns and cities, public investment is the only way to restore our public realm – roads, railways and airports, community health centres and public parks – to unlock the jobs and prosperity that working people want and deserve.
“It is time to value these assets properly in our fiscal framework.”
Ms Reeves has warned of “tough decisions” ahead of the Budget as Labour says it needs to plug a £22 billion “black hole” in the public finances left by the Conservatives.
There has been speculation as to which taxes could be raised in the Budget after Labour committed not to increase national insurance, income tax or VAT.
Ms Reeves must also choose whether to amend fiscal rules to allow more borrowing to fund public spending.
The Chancellor has warned of ‘tough decisions’ ahead (Stefan Rousseau/PA)
As part of its mission for economic growth, the Government has been courting businesses to drum up private investment and is hosting an international investment summit on Monday.
Lucy Rigby MP, co-chair of the Labour Growth Group, said: “We need to break the Tory doom loop of low investment, low productivity and low growth if we’re going to deliver the change our constituents want to see in their communities.
“Significant public investment, which crowds in private, will produce things that really matter to people like a better health service, effective transport networks and well-paying jobs in the industries of the future.
“There is no time to waste and that’s why we’re encouraging the Chancellor today to be bold and ambitious in investing for growth in the coming Budget.”
Josh Simons, co-chair of Labour Growth Group said: “For too long in Britain, investment has been held back by a fiscal framework that has become an object of derision among serious economists.
“It’s time we listen to them, to businesses and to investors, and make government a serious partner for investment again.”
Tom Railton, director of the Invest in Britain campaign, said: “Increasing public investment is one of the most pro-growth policy choices a government can make.
“But the current fiscal framework prioritises short-term thinking over long-term planning, trapping the UK economy in a cycle of low investment and low growth.
“The Labour Growth Group is right: the Chancellor can get growth back on the right trajectory by unlocking more public investment. Fixing the fiscal rules at the Budget so they support growth rather than undermine it is an essential first step.”
Chris Curtis MP, vice-chairman of The Labour Growth Group, said: “For 14 years we had Tory backbenchers pulling their government all over the place and closing down any effort to build new things or invest in the country.
“This letter represents a real statement of intent that this isn’t just a new government who are serious about growth – it’s a new Parliament filled with Labour MPs who are actively pushing for bold pro-growth policies.”