Rachel Reeves has announced billions of pounds in spending cuts, after ordering the Treasury to carry out an audit of the UK’s public finances.
The Chancellor said her aim was to “expose the scale of what has been uncovered” after Labour came to power, pointing to a £22 billion black hole left by the previous government.
She then set out Labour’s “immediate action” to deal with it, including cancellation and delays of major infrastructure projects, before turning to the Government’s longer-term plans to fix “the foundations of our economy”.
Here is a quick look at the headline announcements from Ms Reeves’ speech in the House of Commons.
– £22 billion spending black hole
Ms Reeves told the Commons Labour had inherited “a projected overspend of £22 billion” beyond what the previous government had planned for, which she said the Tories had “covered up”.
She said the Government would aim to recoup £5.5 billion this year, and £8 billion next year.
– Overspends
The Chancellor claimed the Government reserve had been “spent more than three times over” in the current financial year and pointed to specific departmental budgets which had overspent and which the Office for Budget Responsibility was not aware of for its March forecast.
The projected overspend by the previous Tory government on the asylum system, including the “failed” Rwanda plan, was more than £6.4 billion for this year alone, she said.
– Ukraine
There is “not enough money set aside for the reserve” to fund costs associated with Ukraine, the Chancellor said.
But Ms Reeves said the Government “will continue to honour these commitments in full and, unlike the previous government, we will make sure that they are always fully funded”.
– Pay rises for doctors, teachers and other public sector workers
The Chancellor said she would be “accepting in full” the recommendations of the public sector pay bodies to give workers pay rises, and said this would be in the “best interests of our economy too”.
Among the pay offers was a deal agreed with junior doctors which will see them get a 20% pay rise over two years in a bid to resolve their long-running pay dispute with the Government.
Government departments will have to find savings of at least £3 billion to help fund the public sector pay rises, which will cost £9 billion this year.
Cuts will include stopping non-essential spending on consultancy and communications, Ms Reeves said.
– Advanced British Standard
Rishi Sunak’s proposed new qualification, due to bridge the gap between A-levels and T-levels, will not go ahead.
Ms Reeves said the former prime minister “didn’t put aside a single penny to pay for it” as she said the plan would be scrapped.
– Roads, railways and hospitals
The Restoring our Railways programme will be scrapped, the Chancellor said, amid “£1 billion of unfunded transport projects” revealed by her audit of spending.
She also announced that several major road upgrade programmes would not go ahead, including the proposed work on the A303 and the A27, and that the Tories’ “new hospital” building programme would be subject to a review with “a thorough, realistic and costed timetable for delivery”.
– Pensions and social care
Those not in receipt of pension credit or other means-tested benefits will no longer receive the winter fuel payment from this year onwards, Ms Reeves said.
Adult social care charging reforms delayed by the Tories will not be taken forward, saving more than £1 billion by the end of next year, she also announced.
– Budget date set
October 30 will be the date of the new Government’s first budget, the Chancellor said.
She added it will involve taking “difficult decisions” to meet Labour’s fiscal rules, and said this would include decisions on spending and tax.
Ms Reeves did however rule out raising income tax, national insurance or VAT, as per the Labour manifesto.
– Office of value for money
The Government will set up a new watchdog aimed at ensuring all Government spending provides value for money, the Chancellor said.
She also confirmed to the Commons that a Covid anti-corruption probe would go ahead, aimed at clawing back money from Covid fraud.
