Reeves urged to prioritise growth rather than U-turns

Former Treasury minister Jim O'Neill calls on chancellor not to invest in 'politics' at the expense of infrastructure projects

- KATE DEVLIN

Rachel Reeves should use any extra money in the Budget to invest in projects – such as major rail schemes – that could help drive economic growth, rather than funding policy U-turns, a former adviser has said.

As the chancellor scrabbles to find billions to fund a potential hat-trick of benefit U-turns, Jim O’Neill, a former Treasury minister who quit the Conservatives and later advised Ms Reeves, told The Independent that moves to fund policy reversals are driven “by the politics” of the situation.

“I would like to see any money available in [next month’s] spending review or the Budget to be spent on positive multiplier investments,” he said. These are projects that generate multiple pounds for the economy for every £1 spent. This would include the Northern Powerhouse Rail scheme, Lord O’Neill said, which is designed to link major cities in the North following the revelation that it takes longer to travel between them than it does to get to Paris.

The call from the crossbench peer will pile pressure on the chancellor and the prime minister to resist prioritising U-turns at the expense of economic growth.

Ms Reeves and Sir Keir Starmer have pledged to make growing the economy their top priority. Since they entered office, the country’s finances have struggled. However, unexpectedly good GDP figures this week mean that Labour has potentially bought itself more wriggle room.