Rachel Reeves will unveil Labour’s plans to grow the UK economy on Wednesday, warning it “will not come without a fight”.
The chancellor is expected to announce a raft of measures including developing Oxford and Cambridge – which she says has the “potential to be Europe’s Silicon Valley” – building nine new reservoirs and the redevelopment of Old Trafford.
The speech is considered a key moment for a chancellor who has struggled with sluggish economic headwinds since her first budget last autumn.
Politics latest: Follow the chancellor’s speech on Wednesday morning
Despite intense speculation, the government has not yet announced whether they will back a third runway at Heathrow, or further developments at other airports.
In a speech on Wednesday, Ms Reeves will confirm:
• Support for the Oxford-Cambridge Growth Corridor – also known as the Oxbridge Arc – that was scrapped by the Conservatives in 2022. The government points to a report claiming the development, including transport, business growth, and housing, could add £78bn to the UK economy by 2035;
• An agreement that allows water companies to spend £7.9bn to build nine new reservoirs, with two planned for Somerset and then one each in Lincolnshire, Hampshire, Cambridgeshire, Oxfordshire, Suffolk, Kent and West Midlands. A new reservoir hasn’t been opened in the UK since 1992;
• The government will back the redevelopment of Manchester United’s Old Trafford stadium and its surrounding area, alongside plans to change the way projects are appraised and evaluated, in order to “support decisions on public investment across the country, including outside London and the southeast”;
• Confirmation of a new approach to the National Wealth Fund and Office for Investment to get regional development happening faster.
Economics and data editor
Don’t, whatever you do, call it a “relaunch”.
When the chancellor stands up and delivers her much-anticipated speech on Wednesday – with all sorts of exciting schemes for new infrastructure and growth-friendly reforms – she will cast it as part of the new government’s long-standing economic strategy.
Regardless of whether you believe that this is all business-as-usual, it’s hard to escape the fact that the backdrop to the chancellor’s growth speech is, to say the least, challenging. The economy has flatlined at best (possibly even shrunk) since Labour took power. Business and consumer confidence have dipped. Not all of this is down to the miserable messaging emanating from Downing Street since July, but some of it is.
Still, whether or not this constitutes a change, most businesses would welcome the chancellor’s enthusiasm for business-friendly reforms.
But it’s not everything. What about the fact that the UK has the highest energy costs in the developed world? What about the fact that these costs are likely to be pushed higher by net zero policies (even if they eventually come down)? What about the fact that tax levels are about to hit the highest level in history, or that government debt levels are now rising even faster than previously expected.
Read the analysis in full here
A commitment to growth
Ms Reeves will use these plans as demonstrations of the government’s commitment to “growth”.
The chancellor is set to say in her speech: “Low growth is not our destiny. But growth will not come without a fight. Without a government that is on the side of working people. Willing to take the right decisions now to change our country’s course for the better.
“That’s what our Plan for Change is about. That is what drives me as chancellor. And it is what I’m determined to deliver.”
In its election campaign last year, Labour pledged to increase building in the UK – both housing and infrastructure.
These pledges are essential to the government’s plans to grow the economy, which has continued to struggle since Ms Reeves’ budget.
A key date for the chancellor is 26 March, when the Office for Budget Responsibility will provide its latest forecast, an indicator of whether they think the government’s plans will work.
A lack of growth could lead to Ms Reeves having to cut budgets further or raise taxes.
As part of the government’s plans to grow the economy and build, Sir Keir Starmer has vowed to “take on” people who oppose building near where they live, who are known as Nimbys – which stands for Not In My Backyard.
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The Oxbridge arc
The chancellor will also announce that the Environment Agency has dropped its opposition to 4,500 houses around Cambridge after working with the regulator and local authorities.
The prime minister was clear last week that he also wants to see fewer legal challenges to planning applications.
Other developments in that region that are getting government backing include more funding for East-West Rail, with new services between Oxford and Milton Keynes, and upgrades to the roads linking Milton Keynes and Cambridge.
Ms Reeves will also say a new East Coast Mainline Station at Tempsford – between Cambridge and Milton Keynes – will be supported.
Read more on growth:
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Sir Patrick Vallance, a science minister who came to prominence during COVID as the government’s chief scientific adviser, will be made the Oxford-Cambridge growth corridor champion.
Ms Reeves is set to say: “Just 66 miles apart, these cities are home to two of the best universities in the world, two of the most intensive innovation clusters in the world, and the area is a hub for globally renowned science and technology firms in life sciences, manufacturing, and AI.
“It has the potential to be Europe’s Silicon Valley. The home of British innovation.”
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She will point out there is no direct commuter link between the two sites and a lack of affordable housing in the area.
The chancellor will say the industrial strategy will look to “take advantage” of the area’s “unique strengths and potential”.
Mel Stride, the shadow chancellor, claimed the “biggest barriers to growth” in the UK are Ms Reeves and Sir Keir, and their “job-destroying budget”.
He branded the ideas “hastily cobbled together”, saying they will not help businesses.
