PM vows to end gloom as Labour seeks to lift spending restrictions

Keir Starmer will cast off the gloom that has dominated his early days in power and pledge to "build a new Britain" as the Treasury examines tweaking the fiscal rules to allow more capital spending.

- Pippa Crerar , Jessica Elgot ,Kiran Stacey

Sources told the Guardian that the government could use next month's budget to change the way its five-year debt rule is assessed, a change that could allow more spending on housing, roads and hospitals.

After a bruising few days leading up to Labour's party conference in Liverpool, the prime minister will tell the country there is "light at the end of the tunnel" but that they must first join a "shared struggle" to get there.

"A project that says, to everyone, this will be tough in the short-term, but in the long-term - it's the right thing to do for our country. And we all benefit from that," he will say.

In his first conference speech in power, he will also warn there are no easy answers to the country's problems and that he cannot offer "false hope" on the challenges, with Labour warning of more tough choices.

Multiple cabinet ministers and senior party figures said the government had sounded too pessimistic during its early weeks in power, talking too much about its fiscal inheritance and not enough about its long-term plans.

But Starmer will mount a defence of his downbeat rhetoric over the past nine weeks, describing it as an honest prescription that would resonate with public fed-up with broken promises.

"I know this country is exhausted by and with politics. I know that the cost-of-living crisis drew a veil over the joy and wonder in our lives and that people want respite and relief, and may even have voted Labour for that reason," he will say. "Our project has not and never will change... But I will not do it with easy answers. I will not do it with false hope."

The prime minister will also issue a veiled warning to his political critics who have been uneasy about the tone of the early days. "It will be hard. That's not rhetoric, it's reality," he will say.