Rachel Reeves vows to target £174bn of tax reliefs and replace business rates

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Rachel Reeves today announced a Labour government would splash an additional £28billion every year on the UK’s transition to going green. 

Ms Reeves used her big speech at the party’s annual conference in Brighton to vow to be ‘Britain’s first green chancellor’. 

The shadow chancellor’s plans would see the huge sum invested every year until 2030.

The pledge was the centrepiece of her address as she also committed to scrapping business rates, forcing tech giants to pay their taxes and clawing back money wasted on ‘failed’ Covid contracts. 

Ms Reeves also launched a direct attack on her counterpart, Rishi Sunak, as she claimed the Chancellor is ‘missing in action’ amid the current fuel and energy crisis. 

Ms Reeves vowed to examine £174billion of tax reliefs to see if some should be scrapped – but tried to quell fears Labour would hike income tax.

A Labour government would look at existing tax breaks and if they do not ‘deliver for the taxpayer or for the economy then we will scrap it’.   

But she insisted that Labour has ‘no plans’ to increase income tax, despite Keir Starmer setting hares running by stating the move is not ‘off the table’.  

Ms Reeves told activists during her speech at lunchtime that Labour ‘will not shirk our responsibility to future generations’. 

Unveiling her proposed green spending spree, she said: ‘I will invest in good jobs in the green industries of the future; Giga-factories to build batteries for electric vehicles; a thriving hydrogen industry; offshore wind with turbines made in Britain; planting trees and building flood defences; keeping homes warm and getting energy bills down; good new jobs in communities throughout Britain.

‘In other words: protecting and strengthening our everyday economy.

‘And to make this a reality, to unlock that potential, and protect our planet for future generations.

‘I can announce today that I am committing the next Labour government to an additional £28billion of capital investment in our country’s green transition for each and every year of this decade.

‘I will be a responsible Chancellor. I will be Britain’s first green Chancellor.’ 

Ms Reeves urged the Government to freeze business rates next year to give struggling firms a break.   

She said the ‘whole system of business taxation is not fair and it is not fit for purpose’ as she pledged a major overhaul and took aim at tech giants, including Amazon chief Jeff Bezos.

Ms Reeves called on the Government to increase the digital services tax to 12 per cent for the next year, to make sure online companies like Amazon are paying their fair share. 

She said: ‘High street businesses pay over a third of business rates, despite making up only 15 per cent of the overall economy.

‘But when Amazon’s revenues went up by almost £2bn last year, how much did their tax go up? Less than one percent.

‘If you can afford to fly to space you can pay your taxes here on Earth.’

Ms Reeves said Labour would ‘level the playing field and ease the burden on bricks and mortar businesses’. 

‘So I can announce today that the next Labour government will scrap business rates,’ she said. 

‘And here is our guarantee: The system we replace it with will incentivise investment; promote entrepreneurship; reward businesses that move into empty premises.’ 

Ms Reeves said Labour in power would establish a task force to examine contracts awarded by the Government during the Covid crisis. 

She said that ‘£2billion was spent on government contracts awarded to friends and donors of the Conservative Party’.   

She told activists: ‘To those who have secured covid contracts and have not delivered, I give you notice: We expect that money back.

‘We will set up a team to go through every line of every failed contract where value was not delivered, and clawback every penny of taxpayers’ money we possibly can.’

Ms Reeves promised to bring a ‘laser focus to efficiency in our tax system’. 

She said that there are ‘hundreds of different tax breaks’ and while some are ‘important… too many simply provide loopholes for those who can afford the best advice’.

She said a Labour government ‘will look at every single tax break’ and ‘if it doesn’t deliver for the taxpayer or for the economy then we will scrap it’. 

Ms Reeves said one of the tax breaks Labour would scrap is one currently applying to private schools. 

She said: ‘Right now, private schools enjoy charitable status which makes them exempt from both business rates and from VAT at a cost to the taxpayer of £1.7bn every year.

‘But conference here’s the truth: Private schools are not charities and so we will end that exemption and put that money straight into our state schools.’ 

The private education sector has warned it could face collapse if the tax break is removed, forcing more than 600,000 children into the state sector. 

Labour argues that, with more than 1,000 reliefs in place, the system is ripe for reform.    

Pension tax relief as well as the inheritance and married tax allowances could all be targeted. Even the VAT exemption on children’s shoes will be reviewed.

Labour sources said the only tax break certain to remain is the VAT exemption on food. In total tax reliefs are estimated to be worth £174billion a year. 

Veteran Tory MP Sir John Redwood said Labour appeared to be heading ‘straight back into tax bombshell territory’. 

He added: ‘Labour’s plans would be disastrous. They are reaching for higher taxes, as they always do.’ 

Ms Reeves took aim at Mr Sunak in her speech as she accused the Chancellor of being ‘missing in action’. 

She said: ‘Just look at the state of things under the Tories. Empty shelves in our supermarkets. Snaking queues at petrol stations. Businesses waiting weeks for materials. The NHS forced to ration its blood tests. Government having to issue reassurances that it can even keep the lights on. Real anxiety for families and businesses. And Rishi Sunak missing in action.

‘This government is incompetent, in denial, careless and chaotic. They are responsible for all this mess. The Tories have lost control.’

Ms Reeves has confirmed she is looking to increase capital gains tax to target ‘people who get their incomes through stocks and shares and buy-to-let properties’. 

She had tried to rule out a Labour income tax rise, telling The Sunday Times: ‘I don’t have any plans to increase the rates of income tax.’ 

But she was immediately overruled by Sir Keir, who told the BBC’s Andrew Marr show: ‘We are looking at tax – nothing is off the table.’ 

In a round of interviews this morning, Ms Reeves again tried to kill off the concerns about income tax.

Ms Reeves told Times Radio: ‘Keir and I are both very clear, we have no plans to increase income tax and neither of us want to increase income tax, it is not on our agenda.

‘The only people who are increasing taxes for working people are the Tories with their jobs tax that comes in next year that hits ordinary working families and struggling businesses.

‘That’s not our approach, we would ask those with the broadest shoulders – particularly those who get their incomes not from going out to work but from stocks and shares and buy-to-let properties.

‘But Keir and I are not planning to increase income tax, we are both very clear about that.’ 

In her speech to the conference today, Ms Reeves also set out plans for a new ‘Office of Value for Money’ to scrutinise government spending decisions before funding is issued.