Sir Keir Starmer has pledged “tough love” on the public finances in the Budget amid growing fears that Rachel Reeves is set to unveil sweeping tax rises.
The Prime Minister said the need to balance the books was a “challenge we cannot ignore” in his biggest hint yet that there is pain to come for households.
Speaking at an international investment summit he also said that Labour’s huge majority meant it had the space to take “bold action very early on”.
In an upbeat speech on the economy, the Prime Minister told the leaders of 300 of the world’s biggest firms it was a “time to back Britain”.
He said he was determined to boost economic growth by tearing down planning barriers and “ripping up the bureaucracy that blocks investment”.
‘Our public services need our urgent care’
Speaking in the City of London, he said: “We’ve got our problems, of course we have. Our public services need urgent care, our public finances need the tough love of prudence.
“Challenges we cannot ignore because we know just as every leader here knows that those early weeks and months are precious.
“No matter how many people advise you to ignore it, you must run towards the fire to put it out, not let it spread further.”
“The one thing that having a good majority gives you is the opportunity for bold action very early on in a parliamentary term.
“To do the things that have always been put in the too difficult box. Now’s the time to absolutely grasp these things.”
‘Sheer volume’
Sir Keir made the remarks amid growing fears that the Chancellor is to unveil a series of punishing tax rises at her first Budget this month.
Ms Reeves is now widely expected to announce an increase in employers’ national insurance as she struggles to raise cash to balance the books.
She has been warned raids on non-doms, private schools and investors – Labour’s main policies in opposition – will not bring in as much money as hoped.
There has also been repeated speculation that she is planning to increase capital gains tax, though doing so could end up costing the Exchequer money.
Sir Keir said the Government will seek to boost longer-term economic growth by dealing with the “sheer volume” and “inconsistency” of regulation.
‘Clear landing path for investment’
“We will march through the institutions and make sure that every regulator in this country – especially our economic and competition regulators – take growth as seriously as this room does,” he said.
“It’s not just the volume of regulation, it’s also the fact that there’s not even a sort of clear landing path for investment. That is what we need to strip away.”
Sir Keir made the remarks before he was taken to task by a former chief executive of Google over the UK’s suffocating levels of red tape on businesses.
Eric Schmidt said that too much bureaucracy was “killing” the economy and suggested that the Government should appoint a “minister of anti-regulation”.
Mr Schmidt warned that the Government’s goal to deliver clean energy by 2030 will prove impossible without deregulation.
The former Google boss said he had been surprised at Labour prioritising a pro-growth agenda, but that he knew Sir Keir genuinely believed in it.
He said: “When I look at this I say to myself how will you pull it off? There’s plenty of money that’s going to come into the country if you achieve what you’ve just said.
“So when I listen to this I think maybe instead of calling it regulation and investment you should call it a lot of investment and a very small amount of regulation. Maybe you need a minister of anti-regulation.”
Mr Schmidt added: “Democracies, especially something as old as this one, have so many ways in which people can say no.
“The cost of capital and the delay is killing you, and furthermore you’re not going to achieve your 2030 energy goal, which is laudable, without fixing this.
“You have a tactical leadership problem to achieve this and I think you can pull it off, but you have to figure out a way to get control.”
