Labour minister Steve Reed challenged over slow growth and high borrowing costs

Labour minister Steve Reed faced tough questions over the government's economic record at the Labour Party Conference, as critics pointed to slow growth and high borrowing costs. The exchange came amid wider internal debates over immigration, welfare and the party's leadership.

Reed was pressed on why growth remains weak. It was described as sclerotic and too slow. Critics said two Labour budgets had hurt businesses and driven billionaires abroad. Reed rejected the idea that Labour policies caused the slowdown. He said the spring statement had pointed to further interest rate cuts before Donald Trump invaded Iran, which made the global situation difficult and pushed up energy and oil prices. He said the economy was growing with Labour policies before that. He accepted the government must grip public spending and do more to grow the economy.

The interview highlighted that borrowing costs are £8bn higher than expected. The cost of government borrowing is 5.6%, above the levels seen under Liz Truss. Reed acknowledged the international context but said the government must control spending.

On growth, Reed said housing and development are the quickest levers, creating jobs in every postcode. He said announced demand stimulus would help but is not enough. He also discussed using the tax system and council tax to incentivise occupation of empty properties in areas of high housing demand.

The interview touched on Labour's leadership. Reed said Keir Starmer took the decision to stand down and Andy Burnham is now coming in as new Prime Minister. He called for stability behind Burnham. He said Burnham will review big decisions, including Jackdaw, Rosebank, Chagos and immigration reforms. The interviewer suggested Burnham is indecisive; Reed said he is a Labour loyalist and wanted stability after ten years of seven prime ministers and six chancellors.

Internal divisions were also raised. Angela Rayner has come out against Home Secretary Shabana Mahmood's proposals on indefinite leave to remain. Peter Carl said growth is not fast enough and compared the government to a car driving at 30mph down a motorway. Reed said big parties have debates and these are the big challenges: growing the economy, building homes and tackling immigration.

Welfare policy was another focus. Reed said one in six young people are not in employment, education or training. If a young person is not employed by 25, they are likely never to work. He said welfare spending must be reined in but not by penalising people. The interviewer said the PIP bill will double by 2030, up £19bn, and accused Labour of lying about welfare cuts. Reed said funding should go to local areas to link education institutions and employers to get people into jobs.

Reed rejected claims the Prime Minister neglects the south. He said investment must go to the entire country. He noted average wages in London are higher but disposable incomes are lower because of high housing costs, so London cannot be ignored.