Rachel Reeves promises no return to austerity ahead of autumn budget

Chancellor Rachel Reeves has promised there will be no return to austerity under the Labour government, even as ministers warn of difficult choices ahead of the upcoming autumn budget and point to a multibillion-pound shortfall inherited from the previous administration, according to reporting from the Big Issue and Nation.

Speaking at the Labour conference on Monday (23 September), Reeves promised that the forthcoming fiscal package will help rebuild Britain and fix economic foundations. According to the Big Issue, the chancellor maintained that Conservative austerity was a destructive choice for public services, investment, and growth. Yet her remarks accompanied warnings that the government must deal with a legacy left by the Tories, necessitating tough decisions to secure public finances.

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During the same conference speech, Rachel Reeves faced an interruption from a protestor sounding alarm over UK arms exports to Israel. After the man was escorted out, the chancellor stated that this is a changed Labour party and not a party of protest, a sentiment that drew criticism from John Bird, who remarked that he was extremely worried to hear such a position, arguing that parties leaving no room for protest quickly fall victim to dogma and despotism.

Those tough choices have already sparked intense debate and anxiety among anti-poverty charities and older people's advocates. Controversy continues to surround the administration's decision to restrict winter fuel payments to the poorest pensioners, alongside a refusal to remove the two-child limit on benefits. Meanwhile, Ayla Ozmen, director of policy and campaigns at Z2K, raised alarms that disabled people reliant on incapacity benefits might face cuts as the government attempts to address growing social security expenditures. Ozmen noted that while working people received assurances, seriously ill and disabled individuals faced ominous references to a welfare state that does not always incentivise work.

Simon Francis, coordinator of the End Fuel Poverty Coalition, also criticized the winter fuel payment restriction, contrasting the chancellor's mood with the worries of older people. Helen Barnard, the director of policy at Trussell, added that the social security system is currently the most immediate factor pushing people to food banks, urging the government to support disabled people facing barriers to work and a high risk of hunger.

At the same time, Nation reported that Reeves was expected to approve above-inflation pay rises for millions of public sector workers following recommendations from independent pay review bodies. Reports indicated that teachers and approximately 1.3 million NHS staff could receive a 5.5% pay boost. Health Secretary Wes Streeting defended the government's approach on Times Radio, emphasizing that ministers are determined to be honest with the public and avoid ducking difficult decisions regarding inherited public finances, while working to resolve disputes such as those involving junior doctors.

Economists have warned that extending the 5.5% pay rise across the entire public sector could cost roughly £10 billion a year, according to the Institute for Fiscal Studies cited by Nation. Because these costs were not fully accommodated in current spending plans, the cash would need to be raised through existing fiscal headroom, adjusted fiscal rules, or tax increases. However, Reeves has ruled out raising national insurance, VAT, and basic, higher, or additional rates of income tax, while capping corporation tax for the duration of the parliament.

Critics from across the political and charitable spectrum have voiced skepticism over the government's trajectory. John Bird, founder of the Big Issue, likened the chancellor's talk of savings and hard choices to policies of the past, arguing that courting industry and relying on trickle-down private sector growth fails to address deep-seated poverty. Alfie Stirling, director and chief economist of the Joseph Rowntree Foundation, added in the same report that struggling families fear the upcoming winter will worsen without concrete support for housing, welfare, and public services.

Ministers are expected to reveal further findings from the Treasury spending audit, which Labour sources claim will demonstrate the full extent of past economic management, while the chancellor formally announces the date for the autumn budget.