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Labour vows to bring back 45% top rate tax and invest in NHS

The shadow chancellor, Rachel Reeves, has vowed to reinstate the top 45% rate of income tax and put the money into NHS recruitment.

In her speech at the Labour party conference in Liverpool on Monday, she insisted the government’s chaotic handling of the economy in recent days underlined that Labour was now the party of economic competence.

Keir Starmer, the Labour leader, announced on Sunday that his party would reverse Kwasi Kwarteng’s plan to scrap the 45p rate in last week’s mini-budget, but would retain the 1p cut to the base rate of income tax.

Reeves, in an interview at the weekend, accused the chancellor of “fanning the flames” of the falling pound by hinting at further “unfunded tax cuts”.

The pound has fallen by more than 4% to $1.03 – a record low against the US dollar – regaining some ground to stand at about $1.06 on Monday morning, but remains weak.

In her speech, Reeves promised that the next Labour government would spend the money raised on boosting NHS staff as over-stretched health and social care workers prepare for another grim winter.

This would include doubling the number of new district nurses a year, training more than 5,000 new health visitors, creating 10,000 extra nursing and midwife places. A Labour government would also double the number of medical school places from 7,500 to 15,000.

She told delegates: “It will fall to us to fix the damage the Tories have done. We have done it before, we will do it again.”

In what many will regard as a marked contrast with previous years, the audience cheered as she told them: “Labour will not waver in our commitment to fiscal responsibility.

“That is why I set out the fiscal rules for the next Labour government a year ago. Every policy that Labour announces – and every line in our manifesto – will be carefully costed and fully funded.

“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.”

She added: “The chancellor and the prime minister resemble two desperate gamblers in a casino, chasing a losing run. But they’re not gambling with their money, they’re gambling with yours. They’ve lost credibility they’re losing confidence, they’re out of control.”

Labour cited figures that showed how between now and 2026-27, the Tories’ 45p top rate tax cut would cost £6bn and benefit 600,000 people, each of whom would receive £10,000. Most of the benefit goes to the super-wealthy – with a staggering £1bn going to the 2,500 people earning more than £3.5m.

Reeves said that getting public services back on track was crucial for growing the economy. Government estimates show that the total cost of ill-health that prevents working-age people from working is about £100bn per year, with 53% of people who need elective procedures being of working age.

The Resolution Foundation suggests 60,000 people are out of work due to mental ill-health, in particular driving youth unemployment.

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