Rachel Reeves to announce 'Leeds Reforms' on financial services ahead of Mansion House speech
Rachel Reeves is set to announce major financial reforms in Leeds today to allow more people on lower incomes to get on the property ladder.
The Chancellor’s push for regulators to promote growth will see more mortgages available at more than four-and-a-half times the buyer’s salary, following recommendations by the Bank of England.
She will also unveil major changes to financial services, which she says will sweep away the red tape holding back the sector.
Named the Leeds Reforms, after the city which has the largest financial services sector in England after London, Ms Reeves believes they will make Britain the top destination for finance firms over the next decade.
The West Yorkshire city is home to the Bank of England and the Financial Conduct Authority’s main bases outside the capital, while financial services employs 145,000 people and generates £11.8bn for the region.
The Chancellor is set to unveil the full details of the reforms at a summit of top finance executives in Leeds this morning, ahead of her annual Mansion House speech in the City of London this evening.
She is expected to say: “Today, I have placed financial services at the heart of the government’s growth mission.
“Recognising that Britain cannot succeed and meet its growth ambitions without a financial services sector that is fighting fit and thriving.
“And I have been clear on the benefits that that will drive. With a ripple effect that will drive investment in all sectors of our economy and put pounds in the pockets of working people.”
Ms Reeves will also say: “This is the foundation of an economy, and a country that is more active and more confident.
“Where people and businesses look to the future and talk about hope, about opportunity.
“Assured of their own capability, and of the ability of our country to boldly face the challenges that lie ahead, and certain of the prize if they succeed, of higher wages and higher living standards.”
The Chancellor is expected to cite the mortgage changes in her speech, which the Treasury believes will allow 36,000 first-time buyers to get on the property ladder.
It means that Nationwide will be able to make its popular ‘Helping Hand’ mortgage available to people with lower incomes, supporting 10,000 new homeowners.
It comes alongside the creation of a permanent mortgage guarantee scheme from the Government, which will ensure high loan-to-value mortgages continue to be available in times of uncertainty.
The Mansion House speech comes at a time with the Chancellor under serious pressure.
It is her first major public event since her teary appearance at Prime Minister’s Questions, which caused the markets to wobble.
While the economy has contracted two months in a row, making tax rises even more likely in the autumn Budget after Government U-turns on welfare and the winter fuel payment.
Yesterday, Ms Reeves did not rule out the possibility of a new wealth tax but insisted her commitments not to hike tax for “working people” remained.
She said she was not going to comment on speculation around her next budget when a date for the statement had not even been set.
But she said promises not to increase income tax, national insurance and value added tax (VAT) remained in place, along with her “non-negotiable” fiscal rules.
Ms Reeves told reporters: “We haven’t even set the date for the budget yet, so please forgive me if I’m not going to speculate about what might happen at an event that we haven’t even decided a date on yet.
“But we’ve been really clear in our manifesto about the taxes that we won’t increase, and we’re not going to increase the taxes that working people pay, their income tax, their national insurance and their VAT, because I do recognise the struggle that ordinary working people have faced these last few years with the cost of living.”
Economists have warned the Chancellor on several occasions that her fiscal headroom – the leeway within the Government’s self-imposed spending rules – could be eroded by unexpected economic turns.
The combination of the welfare and winter fuel payment U-turns are likely to cost more than £6bn, while Donald Trump’s tariffs are still hitting the UK economy.
The narrow margin by which the Chancellor is on course to meet her goal of funding day-to-day spending through revenues rather than borrowing means she is vulnerable to any increase in debt interest costs or reductions in planned savings, such as on welfare.
Ms Reeves said: “Interest rates have come down four times in the last year under this Labour Government because of the stability that we’ve managed to return to the economy, which is underpinned by those fiscal rules, which have enabled the Bank of England to cut interest rates.”