UK finance minister vows to defend free market economy against Labour

  • Britain's Chancellor of the Exchequer Philip Hammond has slammed the opposition Labour Party's calls for an overhaul of the U.K's economic model during a speech at the annual Conservative Party conference on Monday.
  • Hammond focused speech on "building a stronger economy" and defended the free market economy against what the ruling Conservative Party calls Labour's "dangerous and outdated ideology."
Philip Hammond, U.K. chancellor of the exchequer, speaks to journalists as he arrives for an Ecofin meeting of European Union (EU) finance ministers in Luxembourg on Friday, June 16, 2017.
Jasper Juinen | Bloomberg | Getty Images
Philip Hammond, U.K. chancellor of the exchequer, speaks to journalists as he arrives for an Ecofin meeting of European Union (EU) finance ministers in Luxembourg on Friday, June 16, 2017.

Britain's Finance Minister Philip Hammond has slammed the opposition Labour Party's calls for an overhaul of the U.K's economic model during a speech at the annual Conservative Party conference on Monday.

Chancellor of the Exchequer Hammond focused his speech on "building a stronger economy" and defended the free market economy against what the ruling Conservative Party calls Labour's "dangerous and outdated ideology."

"Our economy is not broken: it is fundamentally strong," Hammond told delegates gathered in Manchester, according to a transcript of his speech. "And while no one suggests a market economy is perfect, it is the best system yet designed for making people steadily better off over time and underpinning strong and sustainable public services for everyone."

"As this model comes under renewed assault, we must not be afraid to defend it," Hammond said, adding: "The market economy frees people and businesses, encourages them to create, take risks, give ideas a go because they can see the results and benefit from their success.

"It's the profits from such businesses that underpin our savings and our pensions. And the wealth that a strong market economy creates which, in the end, pays for our public services."

'Failed' neoliberalism

At Labour's party conference last week, leader Jeremy Corbyn criticized the U.K.'s "failed" model of neo-liberalism, which broadly advocates a laissez-faire approach to economic policies by governments, allowing for the increased role of the private sector, free trade and deregulation.

Corbyn, a well-known socialist, told delegates it was time "that government took a more active role in restructuring our economy."

"Now is the time that corporate boardrooms are held accountable for their actions," he told the conference in Brighton on Wednesday. "And now is the time that we develop a new model of economic management to replace the failed dogmas of neo-liberalism… That is why Labour is looking not just to repair the damage done by austerity, but to transform our economy with a new and dynamic role for the public sector, particularly where the private sector has evidently failed."

Corbyn's attack on the economic model promoted by the Conservatives comes at a time of increasing uncertainty over the U.K. economy, with businesses faced with the unknown entity that is Brexit. Prime Minister Theresa May had hoped a general election in June would give her a bigger majority in parliament and would strengthen her hand in Brexit negotiations, but the move backfired when the Conservatives lost many seats to Labour, whose message has resonated with a lot of younger voters.

On Sunday, May apologized to her Conservative colleagues who lost their seats in parliament, but vowed to win back voters.

Elizabeth Truss, the U.K.'s chief secretary to the treasury, told CNBC on Monday that it was time to get behind the prime minister and said her boss, Hammond, supported her.

"We're going to hear today from the chancellor about our plans for the economy, how we're going to improve productivity, how we're going get more skills and help young people get on that jobs ladder," she told CNBC Europe's Squawk Box. "That's what's important. The chancellor has already said that he completely backs the prime minister… we now need to get on with the job."