Rachel Reeves is changing pension rules as part of a desperate bid to boost economic growth and hand a £160bn uplift to British businesses.
The chancellor has announced plans to loosen the rules around how pension funds invest, allowing them to plough surplus funds into the wider economy.
The changes come after a barrage of criticism over the government’s handling of the economy since coming to power six months ago.
Since the general election the economy has flatlined, while the chancellor’s October Budget lumped businesses with higher taxes and wage bills, leading to major firms laying off thousands of staff.
In a bid to win back credibility with business chiefs and boost economic growth, Ms Reeves will paint the pension fund reforms as part of an “urgent mission” to “tear down the biggest barriers to growth, taking on regulators, planning processes”.
The changes will let employers take surplus cash from their pension schemes to either invest in supplies and equipment for their business or to hand more benefits to employees.
Downing Street claims this would unlock £160bn of funds in surplus, arguing that previous “restrictions have meant that businesses have struggled to invest them.”
Following the announcement on Tuesday, Ms Reeves and Sir Keir met with the CEOs of some of Britain’s biggest businesses to discuss plans to slash red tape and turbocharge the economy, telling business leaders that ministers have been ordered to ditch policies which could stand in the way of efforts to grow the economy.
The roundtable meeting, attended by chief executives including Lloyds boss Charlie Nunn, Nationwide boss Debbie Crosbie and Tesco chief Ken Murphy, came ahead of a major speech by the chancellor on Wednesday where she is set to unveil a bonfire of planning rules to get Britain building again.
Ms Reeves - who is pinning her hopes for economic growth on a commuter town boom - is also expected to announce a third runway at Heathrow airport as well as expansion at Gatwick and Luton.
She has promised to “take an axe to red tape that slows down approval of infrastructure projects”, revealing planning system reforms to allow more houses to be built near commuter train stations.
On Monday night, the chancellor sought to rally Labour MPs behind the government’s growth mission, calling for ministers to “go further and faster”.
Addressing the Parliamentary Labour Party (PLP), Ms Reeves highlighted action ministers have already taken on growth, name-checking deputy PM Angela Rayner, energy secretary Ed Miliband, culture secretary Lisa Nandy, business secretary Jonathan Reynolds and environment secretary Steve Reed.
Addressing a tense PLP meeting, she asked: “Have we done enough? No. We must go further and faster. Because the cost of living pressures are still very real for working people across Britain. And the only way we can turn this around is through economic growth.”
Sir Keir and Ms Reeves have repeatedly cited economic growth as the government’s number one priority, with officials fearful that a failure to grow the economy and boost living standards ahead of the next general election will see Labour lose its majority.
The Office for National Statistics this month said the UK economy grew by 0.1 per cent in November, after falling by 0.1 per cent in each of the previous months.
Highlighting the government’s desperation to get the economy moving again, Ms Reeves threw the gauntlet down to colleagues who might oppose Labour’s planning reforms and deregulation drive.
She told the PLP meeting: “Will that growth come easy? No. There are no easy routes out. There are always reasons for government to say ‘no’.
“Over the past six months as chancellor, my experience is that government has become used to saying ‘no’. That must change. We must start saying ‘yes’.”
