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Reeves sets out plan to tackle £22bn hole in public finances
Chancellor Rachel Reeves said there was a £22 billion black hole in the public finances and accused the Conservatives of covering up the scale of the problems.
In a statement to Parliament, she set out “immediate action” to address the problems she said were uncovered by the audit ordered by the Labour Party when she took office.
She told MPs: “Before the election I said we faced the worst legacy since the Second World War.
Conservatives have left us the worst legacy since World War II.
Today, I’ll explain how this new Labour government will fix the foundations of our economy so we can rebuild Britain and improve every part of the country.
— Rachel Reeves (@RachelReevesMP) July 29, 2024
“Taxes at the highest level in 70 years, debt through the roof, an economy that is just emerging from recession.
“I knew all these things. I was honest about them during the campaign.”
But she added that there were things the Conservatives “hid from the country”.
She said there was a “£22 billion hole in the public finances now, not in the future, but now”.
In a statement to Parliament, the Chancellor said:
– A budget on October 30 will involve “tough decisions” on spending, welfare and taxes.
– The previous Conservative government’s projected overspend on the asylum system, including the “failed” Rwanda plan, was more than £6.4 billion this year alone.
– Winter fuel payments will be restricted to those receiving pension credits or other means-tested benefits.
– Ministers will fully accept the recommendations of independent pay review bodies, saying this is the “right decision for people in work and, more importantly, for people who use our public services”.
– Meeting the recommendations would mean an unfunded overspend of £9bn, which she called on government departments to help fund by finding savings of at least £3bn – including by stopping non-essential spending on advice and communications.
– The government has agreed a pay offer for junior doctors, the chancellor confirmed, amid reports it would be more than 20% over two years.
– Rishi Sunak’s Advanced British Standard will be scrapped as the former PM “hasn’t set aside a single penny to pay for it”.
– Adult social care charging reforms delayed by the Tories will not go ahead, saving more than £1bn by the end of next year.