Keir Starmer will attempt to brush aside critics of his economic strategy by insisting it can be the “antidote to division” being sown by the populist right.
Under pressure to be more radical, the prime minister will tell the Labour party on Tuesday that economic growth “can either build a nation or it can it pull it apart” depending on who and which parts of the country might benefit.
As the government struggles to strike a more hopeful tone on the economy, despite a tight fiscal backdrop and difficult choices ahead over tax, Starmer will say that rising living standards could “face down” the threats of a volatile world.
The prime minister has adopted a more combative tone against the right in recent days, in part to reassure Labour’s frustrated MPs and members that he is the right person to take the fight to Nigel Farage in the coming years.
In his speech to the Labour party conference in Liverpool he will attempt to reassert his authority over his restive party, as Ipsos on Monday found that he was the least popular prime minister in the history of their polling.
“The defining mission of this government is to grow the economy, improve living standards and change the way we create wealth,” the prime minister is expected to say.
“An economy that grows not just from the top but from the grassroots. Because growth is the pound in your pocket. It is more money for trips, meals out, the little things that bring joy to all our lives, the peace of mind that comes from economic security.
“But it is also the antidote to division. That’s the most important aspect of national renewal. The way you grow an economy, not just how much, but who and where benefits that can either build a nation or it can pull it apart.
“And in the world we must face the threats we must defeat, Britain needs an economy that unites, every person, every community, every great nation on these islands. Standing together, as so often in our past, facing down the threats of a volatile world.”
His speech was released after Rachel Reeves on Monday said the country would face “further tests” in the months ahead, adding that her choices at next month’s budget would be made “all the harder” by harsh global headwinds and long-term damage done to the economy by the Conservatives.
The chancellor faces the prospect of having to find up to £30bn in tax rises or spending cuts next month if, as expected, the Office for Budget Responsibility cuts its forecast for future productivity growth to match the consensus of other experts.
On Monday evening Reeves signalled she would raise gambling taxes at the budget. “I do think there’s a case for gambling firms to pay more,” she told ITV.
Darren Jones, the prime minister’s chief secretary, refused to rule out the possibility the government would break Labour’s manifesto pledge to not increase income tax, VAT or national insurance rates. “The manifesto stands today because decisions haven’t been taken yet,” he told Sky News. “I’m not ruling anything out, and I’m not ruling anything in.”
However, Reeves also urged Labour conference in Liverpool to “have faith” that things would get better, despite the difficult economic landscape. Taking on Farage’s Reform UK directly, she said she wanted to “silence the nagging voices of decline”.
The chancellor also warned Labour figures “peddling the idea” that the government could abandon fiscal responsibility to free up more money for public spending were “dangerously wrong” and risked serious damage to the economy.
In a veiled criticism of Andy Burnham, the Greater Manchester mayor who has urged the government to take a bolder approach to the economy, she said the party should be “honest” about what calls to borrow more would mean.
However, Burnham, a former chief secretary to the Treasury under Gordon Brown, rejected suggestions that he was “hopeless” on the economy or had “no idea about how to make it add up” as he defended his recent interventions in national politics.
He told the Guardian’s Politics Weekly podcast: “You need strong fiscal rules, but it doesn’t mean in exactly their current form … If there was an investment that could be shown in a short order to reduce current spending, then I think that is an investment that can prudently be made.”
Burnham also sought to address the “sense I’m completely out for myself, disloyal”, citing behind-the-scenes work he had been doing over the summer to help to progress the government’s Hillsborough legislation.
“It sticks in my throat somewhat for people who have just arrived on the scene to be throwing some of the comments at me that they have done,” he said. “I did everything that I possibly could have to make this conference a success.”
Burnham, whose leadership ambitions have dominated the conference, insisted that he had been seeking to provoke a wider debate within Labour about the party’s direction ahead of local elections next May, as the government faces a sustained lag behind Reform UK in the polls.
“While the government’s done good things, I don’t think it’s come together yet as that powerful story of the future of Britain,” the Labour mayor said.
In his speech, Starmer is expected to warn that Britain faces a “defining choice” between “decency and division”. He will say: “We can all see our country faces a choice, a defining choice. Britain stands at a fork in the road.
“We can choose decency. Or we can choose division. Renewal or decline. A country, proud of its values, in control of its future, or one that succumbs, against the grain of our history, to the politics of grievance.”
The prime minister is expected to draw on the memories of the 1945 Labour government to inspire his party, while warning supporters there will be more tough choices to come. “It is a test. A fight for the soul of our country, every bit as big as rebuilding Britain after the war, and we must all rise to this challenge,” he will say.
“And yet we need to be clear that our path, the path of renewal, it’s long, it’s difficult, it requires decisions that are not cost-free or easy. Decisions that will not always be comfortable for our party.”
Shabana Mahmood, the home secretary, warned delegates that they would not like some of the measures she expects to implement to deal with small boats, implying they would involve some significant curtailment of human rights.
“In solving this crisis, you may not always like what I do. We will have to question some of the assumptions and legal constraints that have lasted for a generation and more,” she said.
“But unless we have control of our borders, and until we can decide who comes in and who must leave, we will never be the open, tolerant and generous country that I know we all believe in.”
