Labour accuse Kwarteng of ‘fanning flames’ of falling pound

Labour has accused Kwasi Kwarteng of “fanning the flames” of the falling pound by hinting at further “unfunded tax cuts”.

The pound hit a record low against the dollar in early trading as markets react to the Chancellor’s mini-budget.

Shadow chancellor Rachel Reeves accused Mr Kwarteng of “gambling all of our money”.

Labour announced plans to create a wealth fund to “build British industry” at the party’s conference on Monday.

Overnight, the pound fell by more than 4% to $1.03 – its lowest level against the US dollar.

Sterling has since regained some ground to stand at about $1.06 on Monday morning.

Talking from the Labour conference in Liverpool, Ms Reeves told BBC Radio 4’s Today programme: “It is incredibly concerning.

“I think many people had hoped over the weekend things would calm down but I do think the Chancellor fanned the flames on Sunday in suggesting there may be more stimulus, more unfunded tax cuts, which has resulted overnight in the pound falling to an all-time low against the dollar.”

On Sunday, Mr Kwarteng said the tax cuts outlined in his so-called mini-budget “favour people right across the income scale”, and hinted that more were on the way.

The move, which will be funded by a sharp rise on government borrowing, drew criticism from some Tory MPs and Labour, which said the tax cuts would benefit the richest.

Sir Keir told the BBC he would reverse the cut to the 45% tax rate on earnings above £150,000, if he wins power, but keep the government’s 1p cut to the vase rate of income tax.

He said Mr Kwarteng’s move was “the wrong choice” during a cost-of-living crisis and said a Labour government would “reduce the tax burden on working people”.

On the opening day of Labour’s conference:

Ms Reeves is expected to use her speech at the party conference to set out plans for a new National Wealth Fund, to invest an initial £8.3bn in green projects.

She will say the fund will see wealth “flow back into” communities. If elected, Labour would use the fund to invest in battery factories and cleaner steel plants.

Labour says the national wealth fund would ensure that British taxpayers benefit from businesses built with public money in the UK.

Ms Reeves will say that, when public money is spent on projects, the taxpayer “would own a share of them”.

Labour has also set out plans to make the UK the first major economy in the world to generate all of its electricity without using fossil fuels.

Sir Keir insisted zero carbon electricity production by 2030 was an ambitious target but “doable”. The government aims to achieve it by 2035.