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Chancellor Rachel Reeves to unveil cuts to plug ‘£20bn black hole’ in public finances | Politics news
According to the Treasury, Rachel Reeves will “announce immediate action to restore economic stability and deliver departmental savings this financial year”. The chancellor will also accuse Rishi Sunak’s government of “covering up the true state of the public finances”.
By Tim Baker, Political Reporter
Monday, 29 July 2024 08:16, United Kingdom
Rachel Reeves will flag up Labour’s plans for cuts to government departments and the civil service as the new government attempts to accuse Rishi Sunak of “covering up” problems with the economy.
The Chancellor is due to address the House of Commons this afternoon following a review of the government’s finances after taking office earlier this month.
Mrs. Reeves is expected to reveal a £20bn ‘black hole’ she found in the books – although the Conservative Party argues she should have been aware of this before taking office.
Follow a Sky News special programme on Ms Reeves’ speech from 3pm on Sky channel 501, Virgin channel 602, Freeview channel 233, on Sky News website It is application or in YouTube.
Analysis: Top Things to Watch as Reeves Announces Spending Cuts
Ms Reeves will announce the date of this year’s autumn budget, with speculation Work are considering raising taxes on this fiscal event.
Cabinet Office minister Pat McFadden told Sky News there would be no tax rises announced today, but that does not mean they could not come in the autumn.
The Chancellor’s speech will begin after 3pm, depending on what other business is happening in the House of Commons.
Today’s announcement will set out plans for public sector cuts in a bid to save money for the current fiscal year.
According to the Treasury, Ms Reeves will “announce immediate actions to restore economic stability and deliver departmental savings this financial year”.
She is expected to accept the pay review body’s recommendations, meaning some public sector workers, including teachers, members of the armed forces and prison staff, will receive above-inflation pay rises.
The cuts are likely to include the immediate suspension of some road projects, including the Stonehenge tunnel.
Forty hospital construction projects are also expected to be suspended.
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Ms Reeves is expected to say: “It’s time to come clean with the public and tell the truth.
“The previous government refused to take tough decisions. They covered up the true state of public finances. And then they ran away. I will never do that.
“The British people voted for change and we will deliver that change. I will restore economic stability. I will never stand by and let that happen again.
“Let’s fix the foundations of our economy so we can rebuild Britain and improve every part of the country.”
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Mr McFadden, Chancellor of the Duchy of Lancaster, told Sky News that the Office for Budget Responsibility (OBR), which scrutinises government spending, would have to revise its forecast “because there are pressures during the year that the government has not told us about”.
He accused the Conservative government of “emptying the reserve to pay for its [Rwanda] asylum policy and therefore was not available for other things that might happen throughout the year.”
The Chancellor will announce an Office of Value for Money (OVM) — funded from existing Public Service budgets — to “end unnecessary spending”.
The OVM will make recommendations on how to save money for the public coffers this year.
Labour ‘approves’ tax hike
Read more:
Expert says ‘black hole’ corresponds to Conservative tax cuts
The chancellor simply filled the black hole
New reforms will be announced to drive “efficiencies” – a word that usually means cuts – across government departments and bodies such as the Prison and Probation Service, the Met Office, the Environment Agency and Her Majesty’s Revenue and Customs.
There will also be “immediate action” to halt “non-essential spending” on consultants, as well as the sale of “surplus properties” and the acceleration of previously announced efficiencies.
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Ms Reeves is also expected to say: “Before the election, I said we faced the worst legacy since the Second World War.
“Taxes at a 70-year high. Debt at an all-time high. An economy that was just coming out of recession. I knew all these things. I was honest about them on the campaign trail. And the hard choices that that meant.
“But when I arrived at the Treasury three weeks ago, it became clear that there were things I didn’t know. Things that the opposing party had covered up from the country.”
The Chancellor also plans to return the UK to one tax event a year in a bid to restore stability to markets.
And she is ready to recommit to the government’s fiscal rules — including not borrowing to finance everyday spending and reducing debt by the fifth year of the economic forecast.
Reeves promises ‘revolution in planning’
Shadow Treasury Secretary Gareth Davies said: “Rachel Reeves is trying to mislead the British public into accepting Labour’s tax rises.
“She wants to pretend that the OBR, set up by the Tories and whose forecast has been used in every budget of the last Tory governments, doesn’t exist to make anything she says credible and, like her books, this announcement is a copy and paste of what came decades before.
“But her words and actions about supposedly saving taxpayers money are an insult when she is secretly planning to raise taxes at the same time.”