Sources say that Reeves may change the fiscal rules in order to allow for more capital expenditure.

According to sources within the government, Rachel Reeves may change how fiscal rules of the government are calculated in order to allow for billions more pounds to be spent on capital projects. The chancellor said Labour Conference that she believes the Treasury undervalues public investment, and wants to change how public spending is viewed at the top of the government.

Sources confirm that she may use the budget of next month to alter the way government debt is calculated. This could lead to more money being spent on housing, roads, and hospitals. Reeves said to delegates at the Liverpool conference: “It’s time for the Treasury to stop just counting the costs and start recognising their benefits.”

She said at a business event that “there are going to be difficult decisions in the budget but I can assure you we will always provide value for taxpayers.” We will also consider the benefits and value of investments, not just their costs.

Her comments show that the government is increasingly convinced that it needs to update its fiscal rules to spur investment and encourage growth.

The Treasury has been accused by critics of prioritising debt reduction over long-term growth and infrastructure needs. They cite decisions like cancelling the HS2 rail route, as an example.

Tom Railton, director for the Invest in Britain Campaign, said that if Labour continues to maintain the discredited Conservative debt-stock’ rule, Britain may struggle to escape from the economic stagnation this rule has helped to create.

“We need to create a budget that is geared towards long-term sustainability and growth. This must start by creating fiscal rules that are pro-investment.” Labour pledged in its manifesto that it would follow the rule of the previous government, which stated that the public sector’s net debt as a percentage of the economic output should fall in the fifth year. Sources say that the method of calculating this debt is being re-examined.

Reeves has been considering excluding losses from the Treasury when the Bank of England ends its quantitative easing programme that was implemented during the crisis. This could create headroom for the public finances of up to £15bn, according to experts.

A second person who was familiar with the discussion said that the chancellor is considering plans to remove the National Wealth Fund, and GB Energy from the government’s books. Andy King, former senior official of the Office for Budget Responsibility has stated that this could give her an additional £15bn in borrowing capacity. Thirdly, if Treasury determines that certain projects will boost the economy enough to justify their inclusion in the calculation of debt, then they can be excluded.

Officials from the government said that they are also working on a publication plan for estimates of how new capital projects can stimulate growth and how much money these projects will generate for the Treasury. Reeves, who said Monday that the strategy was to encourage construction in Britain, includes these plans.

She painted a more positive picture of the long-term future of the economy than she had in recent months. “What you will be able to see in your town or city is something we haven’t seen enough of in our country, shovels on the ground, cranes flying in the air, and the sounds and sights of the coming future,” she said. “We will make it a reality.”

She said: “This moment is ours, it’s our chance to prove that politics can be a force for good, and that Britain has its best days ahead.” She also defended some of the less popular decisions she made in her first weeks at Treasury, such as cutting winter fuel payments for pensioners and infrastructure projects she claims were not adequately funded. Reeves said at the conference, “I am aware that not everyone will agree with my decisions in this room or across the country.” I won’t avoid those decisions for political convenience or personal gain.

She also defended government’s decision , to raise the public sector pay despite the difficult outlook for spending. She said that the government made the decision not only because the public sector workers were in need of a pay increase, but also because it was a good choice for parents, British patients, and the British public. It was also deemed the best choice to recruit and retain staff, as well as the right one for our country.

“If the Conservative Party wants to fight over who can be trusted to choose the right services for our public service users and ourselves, then I say bring it on.” The Royal College of Nursing, which was almost delivering her message at the time, announced that its members had refused a government-proposed 5.5% increase in pay. The trade unions have been a constant thorn in government’s sides throughout this conference. They are organizing a vote to reverse the cuts to winter fuel payments.

Reeves stated the budget for next month would not herald back to austerity . She had told the BBC that Whitehall budgets will rise in average but not for each department. According to economists, a 1% increase in Whitehall budgets over inflation would result in severe cuts for areas that are not protected such as local government and courts. Labour official: “We had to be honest with ourselves about the magnitude of the problem. Both the public and business want an honest government. “This speech was all about the prize that would be at the end.”

The chancellor did not announce any new policies, but he confirmed plans to restart investigations in £674m of Covid contracts. Standing ovations were given by delegates upon the announcement.

Reeves was interrupted by an heckler who protested British arms sales in Israel. The chancellor responded by saying, “We have had years of protests, years of division, and years of decline, but we left working people worse-off.”