By Alistair Smout, Andrew MacAskill and Elizabeth Piper
LIVERPOOL, England (Reuters) -British finance minister Rachel Reeves ruled out a return to economic austerity on Monday, trying to brighten the gloomy tone her party had adopted since its landslide election victory in July.
Labour had repeatedly told Britons that the outgoing Conservatives, who imposed a radical programme of cutbacks after the 2008 financial crisis, had left a yawning gap in public finances, hinting at tax increases and spending cuts ahead.
Instead, speaking to the party's annual conference, Reeves painted a picture - long on hope but short on detail - of a Britain richer from investment in manufacturing and services, where work paid a decent wage and new generations could thrive.
But she gave no timeframe for when Britain could see the kind of growth and new jobs she described, and again said she would have to take more tough decisions like her much-criticised one to cut winter fuel payments for pensioners.
Reeves told a packed conference hall in the northern English city of Liverpool: "There will be no return to austerity. Conservative austerity was a destructive choice for our public services - and for investment and growth too."
"We must deal with the Tory (Conservative) legacy and that means tough decisions. But we won't let that dim our ambition for Britain."
She justified the cut in fuel payments by listing what she said were the failings of the previous government, including a 22 billion pound ($29 billion) hole in the public finances.
"I know that not everyone in this hall or in the country will agree with every decision that I make. I will not duck those decisions: not for political expediency, not for personal advantage," she said, adding that such decisions would help better balance the books to offer fiscal stability.
"So believe me when I say: My optimism for Britain burns brighter than ever. My ambition knows no limits because I can see the prize on offer, if we make the right choices now," she added, announcing the launch of free breakfast clubs for primary school children.
Reeves highlighted the boost to growth that higher public investment could bring. "It is time that the Treasury (finance ministry) moved on from just counting the costs of investments, to recognising the benefits too," she said, vowing to end "the ideas of the past."
Reeves has previously said she will strip public investment from annual budget deficit calculations. But she has also promised to stick with another rule to put public debt on a downward path, limiting her room for manoeuvre.
LIFTING MOOD
Her more optimistic message seemed to be aimed at improving the mood at a time when the government has been under pressure to explain why ministers accepted donations for clothes.
A survey last week indicating consumer confidence had plunged has led to accusations that Reeves and Prime Minister Keir Starmer are actually damaging the economy with an overly gloomy view.
Business largely welcomed her words and the focus on forming a long-term industrial strategy. "It is a vital piece in the jigsaw of future economic growth," said Stephen Phipson, chief executive of Make UK which supports manufacturing.
But Danny Sriskandarajah, chief executive of the New Economics Foundation think tank, said Reeves offered little about how government will rewire an unfair economic system.
Reeves spent much of her speech lambasting the former Conservative government for leaving its successor such a mess, highlighting the uncosted budget of former Prime Minister Liz Truss which triggered market panic two years ago to the day.
She said not returning to austerity meant that, despite some tough decisions, there would be growth in overall public spending under Labour.
In a sign of the challenges ahead, English National Health Service nurses voted on Monday to reject a government pay award for 2024/25.
With government debt at the highest level in decades, Reeves said she would try to claw back money by appointing a COVID corruption commissioner to investigate more than 650 million pounds of pandemic contracts, some of which she described as being awarded to friends and donors of the Conservative Party.
"We want that money back," she said to applause.