Rachel Reeves to warn the UK must ‘fight’ for economic growth

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Chancellor Rachel Reeves will promise to go “further and faster” to kick-start the UK economy in a major speech on Wednesday, as she tries to convince financial markets and business leaders that the government is committed to driving growth.

Reeves will signal she is prepared to have a “fight” with opponents — including environmentalists — who stand in the way of the government’s planning reforms. 

The chancellor is under pressure to reassure businesses and investors after a tax-raising Budget in October, a major package of employment reforms, and a recent rise in gilt yields.

Reeves will confirm the government is reviving plans for an “Oxford-Cambridge growth corridor” as part of a broader push to liberalise the planning regime and get more homes built. 

The chancellor will also emphasise progress on a new “industrial strategy” and signal her support for airport expansion in Greater London.

She will also confirm plans to relax rules over the release of some of the £160bn surplus in defined benefit pension schemes. 

“For too long we have accepted low expectations, accepted stagnation,” she will say. “Low growth is not our destiny. But growth will not come without a fight.”

The Oxford-Cambridge arc would involve new transport links and housing between Britain’s two foremost university cities. It was shelved three years ago by then-Conservative prime minister Boris Johnson.

Reeves will highlight plans for a new 4,500-home development around Cambridge and praise Cambridge university’s proposal to build an innovation hub. 

The chancellor has stepped up her pro-growth rhetoric in recent months, ordering Whitehall departments and regulators to prioritise policies that will deliver economic benefits. 

On Tuesday Starmer promised to “hard wire growth into all decisions in the cabinet” during a meeting with Reeves and senior executives in the City of London.

Downing Street confirmed a change to the Whitehall “write round” process, under which cabinet members are consulted on new policies, meaning ministers will have to set out new policies’ “growth credentials”.

In March, the government will unveil a planning and infrastructure bill to block protesters from using multiple judicial reviews, and to erode the power of environmental quangos to delay big housebuilding schemes. 

The new legislation, along with Reeves’ enthusiasm for a new third runway at Heathrow, has prompted jitters among some green groups. 

Shaun Spiers, executive director of the Green Alliance, said Reeves’ speech looked set to “take a wrecking ball” to relations between the government and the environmental movement. 

“Far from building the partnership needed to deliver the genuine programme of economic and social renewal at the heart of the clean power and growth missions, the government seems intent on torching a core part of its political coalition in pursuit of a series of high-risk, high-carbon, but ultimately, low-return projects,” he added. 

Transport secretary Heidi Alexander is expected to approve expansions at both Luton and Gatwick airports before the spring in a quasi-judicial process. 

Heathrow is still waiting for clear political support before it submits its own application — potentially before the end of the year — to proceed with the third runway.  

Expanding Heathrow was previously opposed by eight current cabinet members including prime minister Sir Keir Starmer himself. 

Climate change secretary Ed Miliband is a long-standing opponent of the scheme, but has indicated he will not resign from the cabinet over the U-turn. 

But several backbench Labour MPs with west London constituencies criticised the potential Heathrow expansion in the House of Commons on Tuesday.

Andy Slaughter, MP for Hammersmith & Chiswick, said there was “no chance of there being spades in the ground in this parliament”.

The government needs to update its “airports national policy statement” because the current one — published in 2018 — was produced before the UK adopted tough climate goals including net zero 2050.

A report published on Wednesday by the Good Growth Foundation, a new think-tank run by Praful Nagund, former Labour candidate for Islington North, will warn that lifting GDP will not be enough to keep voters happy. 

“The cost of living is voters’ primary focus . . . success looks like ending the crisis and increasing disposable income,” the report will say. “The public must see the economy growing in a way that benefits them.”