Shadow chancellor Rachel Reeves has promised to bring back the top rate of income tax and spend the money raised on hiring more NHS workers.
In her speech to Labour’s annual conference, she accused Liz Truss and Kwarsi Kwarteng of behaving like “desperate gamblers in a casino”.
“They’ve lost credibility, they’re losing confidence, they’re out of control,” she told delegates.
Labour was now the party of economic competence, she said to cheers.
The party has already announced that it would bring back the 45p top rate of income tax scrapped by Mr Kwarteng in last week’s mini-budget, if it wins power. The party would keep the government’s 1p cut to the base rate of income tax.
Ms Reeves said the next Labour government would spend the money raised on “the biggest expansion of medical school places in British history, doubling the number of medical students, so our NHS has the doctors it needs”, as well as more nurses and midwives.
Ms Reeves has accused the chancellor of “fanning the flames” of the falling pound by hinting at further “unfunded tax cuts” in a BBC interview on Sunday.
Overnight, the pound fell by more than 4% to $1.03 – its lowest level against the US dollar. Sterling has since regained some ground to stand at about $1.06 on Monday morning, but remains weak.
In her conference speech, Ms Reeves warned the government was “putting our economy in danger” and vowed to fight its economic policies “every step of the way”.
In contrast to the Conservatives’ tax cuts for the wealthy, Labour would invest in the NHS and the “industries of the future” to create a stronger and fairer economy, she said.
She told delegates: “Last year, I told this conference that I was more than happy to take on the Tories on economic competence, because I know we can win.
“I’m now wondering if they even plan to turn up for the fight. It is becoming clearer by the day that Labour is the party of economic responsibility and the party of social justice.
“It is time for a government that is on your side, and that government is a Labour government.”
To Rachel Reeves, the Conservatives are “out of control” – and she sees an opportunity to establish Labour as the party of economic competence.
So that’s why she is keen to point out that her spending commitments are costed.
The policy of restoring the 45p tax rate is useful as a political dividing line with the government: Labour would use the £2bn the party says it would raise on the NHS rather than retain a Conservative giveaway to high earners.
But what Labour’s treasury team are less keen to point out is the economic logic of this decision.
The Conservative government is paying for the top rate tax cut by increasing borrowing.
So Labour could have chosen to reduce borrowing by reversing it.
Instead, they will spend the money it raises – but just in a different way from Liz Truss.
Labour can argue that – in line with their wider policy – they are “borrowing to invest’ but it is more difficult to argue that this tax measure would mean Labour would borrow less than that “out of control” government.
Ms Reeves said the party would spend the money she claimed the 45p top rate would raise on doubling the number of district nurses qualifying every year, 5,000 more health visitors and 10,000 more nurses and midwives a year.
Ms Reeves also used her speech to set out plans for a new National Wealth Fund, to invest an initial £8.3bn in green projects.
She said the fund would see wealth “flow back into” communities. If elected, Labour would use the fund to invest in battery factories and cleaner steel plants.
Labour says the fund would ensure that British taxpayers benefit from businesses built with public money in the UK.
Ms Reeves said that, when public money is spent on projects, the taxpayer “would own a share of them”.
As chancellor, she told delegates, “I want to buy, make and sell more in Britain.”
Labour has also set out plans to make the UK the first major economy in the world to generate all of its electricity without using fossil fuels.
Sir Keir insisted zero carbon electricity production by 2030 was an ambitious target but “doable”. The government aims to achieve it by 2035.