UNIONS want Chancellor Rachel Reeves’s Budget to put “flesh on the bones” for a strong industrial strategy and Labour to adopt “flexible” fiscal rules that do not hold back growth, the TUC’s general secretary says.

In a wide-ranging interview ahead of the start of the union federation’s annual Congress in Brighton, Paul Nowak explained why he is confident the government will deliver the New Deal for Working People in full.

The union leader called for wider welfare reforms, including targeted support, so pensioners due to lose winter fuel payments aren’t afraid to put on the heating this winter.

And he singled out Tory leadership front-runner Robert Jenrick for “giving licence” to last month’s racist far-right riots as he called for a “grown-up” debate on migration after the latest Channel tragedy saw 12 people lose their lives when their small boat ruptured. 

He told the Morning Star that he hoped the mood of the first Congress under a Labour government in 15 years would be optimistic, but he said that delivering the New Deal in full is “absolutely vital.”

“For far too many people work is low paid and it’s insecure, and part of Britain’s economic problems are rooted in the fact that we’ve got far too many people in that low-paid insecure employment,” he said.

Referring to a Unite motion for a 1 per cent tax on assets above £4 million and Sir Keir Starmer’s recent pledge that “those with the broadest shoulders” would bear the greatest financial burden at the Budget, he said: “Certainly one of the debates at Congress will be how do we make sure that we’ve got a tax system that’s effective at taxing wealth, not just working people.

“We’ll be talking at our Congress about potential for wealth taxes, a long-standing call to equalise capital gains tax with income tax — it’s absolutely ridiculous that supermarket or clinical support workers could be paying a higher effective rate of tax than our previous prime minister, or indeed those who derive most of their income from shares or properties.”

The TUC leader piled further pressure on Reeves to drop her self-imposed fiscal rules that government’s debt-to-GDP to be falling in five years’ time. 

“We’ve long called for fiscal rules — under the previous government but under this government as well — to give the flexibility it needs to invest into the UK economy,” he said.

“We’ll have to the debate in Congress but I absolutely think there is that need for flexibility to make sure that fiscal rules will grow the economy not potentially hold it back.”

Stressing Labour’s “stark contrast” with the Tories in accepting pay review body recommendations and quickly ending industrial disputes with junior doctors and rail workers, he described Reeves’s new £7.3 billion national wealth fund, which the government hopes will attract private investment into big infrastructure projects across Britain, as the “beginnings of investment in industrial strategy.”

“It’s a downpayment: I don’t think it’s the be-all end point in terms of the investment we’re going to need in the economy but it’s a useful starting point,” Nowak said.

“What we now need to see is how does that link directly to Great British Energy [Labour’s planned state-owned energy company]?

“How does that link to broader industrial strategy that [Business Secretary] Johnny Reynolds is taking forward?

“Labour’s first mission is to grow the economy and the industrial strategy will be at the heart of that, so I want to see them at the Budget to put the flesh on the bones of that.

“What they have indicated is there will be a Spending Review this year and a further Spending Review next year, and I hope by the time we get through until say spring next year, that the economy will be looking more positive and they will be able to set out a comprehensive programme of investment in our public services in particular.”

Nowak called for wider welfare reforms ahead of a binding Commons vote on whether to axe the winter fuel allowance for all but the poorest pensioners in receipt of tax credits.

The vote next Tuesday comes amid growing unease about government plans  from its backbenchers.

He said: “I hope that the Chancellor will between now and the Budget be setting out further support for those pensioners, particularly those who are not eligible for pensioners’ tax credit but who are just above the threshold. We want to go into the winter to make sure that those people are not afraid to put on the heating.”

With ministers only committing to reviewing the widely condemned two-child benefit cap, he said: “I hope what comes of the review is that the two-child benefit cap is scrapped but what I would say is that that alone is not going to make our universal credit system fit for purpose.

“This is a system that has been brought into disrepair by the Tories.

“We’ve got members in work who are scared stiff of losing their jobs because they know the cliff edge between their wages and what they’d be getting in universal credit is massive.

“We’ve got people who are struggling to get back to work and UC is not adequately supporting them to get back into work, people with long-term health conditions the system just doesn’t provide a decent standard of living so lots to fix on UC.

“For my mind that’s why that national conversation about tax is important, that’s why levelling the playing field for example between the online retailers and the high street is really important.

“We’ve complained bitterly about Amazon’s approach to unions and the campaign it ran against the GMB but I also think that the likes of Amazon don’t pay fair share of tax in the UK and I want it and the other big online retailers to be paying their fair share of tax, so we’ll be putting in our budget submission in the next few days and we’ll be making the case for investment in public services, investment in our physical and social infrastructure and as I say giving people a bit of hope and light at the end of the tunnel, that the government has got a plan to not only grow the economy but to boost living standards.”

He said he believed Labour will ignore the “siren voices” from the business lobbyists calling on it water down its New Deal for Working People.

“I was at a roundtable two weeks ago with employers organisations, with unions, with the deputy prime minister [Angela Rayner], Johnny Reynolds, the Department for Business, and they reiterated the commitment to deliver in full and I think they’ll do it for a number of reasons,” he said, citing polling showing overwhelming cross-party support for the policy’s measures.

Reacting to the latest Channel tragedy, Nowak, who has spoken of both his grandfathers immigrating to Britain during the second world war, said: “On a human level it’s absolutely appalling.

“This country should always have a compassionate, principled approach to how we support people who are fleeing poverty and persecution.

“I want the new government to have a sensible grown-up debate about migration in the round and how we support those seeking asylum and refuge in this country and I think the tragic events in the Channel reinforce that need for the debate.

“That alongside the riots that we saw on our streets where we are seeing populist far-right politicians deliberately stir up divisions in communities I think it’s a responsibility for the whole of the trade union movement, the TUC and the Labour government to think about what we can do to bring communities together. 

“My gut instinct is the overwhelming majority of the people of this country are decent, are kind and are generous. And that applies across their approach to all sorts of issues and we should build on that decent inbuilt majority rather than pandering to those who want to cause divisions in our communities.”

He added: “I think the Tories actually need to take responsibility for some of what we saw on the streets in August because when you have one of the candidates for the Tory leadership, Robert Jenrick — remember this was the guy who painted over murals in a reception centre for children who were seeking asylum because he didn’t want it to be too welcoming — I think that gives licence for people to use racist language and to act inappropriately.

“So I think the Tory Party needs to take a long, hard look at itself and ask itself ‘are we part of the problem’?”