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UK finance chief says public finances show $28bn spending hole
British Chancellor of the Exchequer Rachel Reeves has vowed to make the “necessary”, “urgent” and “incredibly difficult” choices to restore the country’s economic stability.
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Britain’s finance minister Rachel Reeves on Monday announced a series of project cuts after detailing how the newly elected Labour government inherited a projected £22 billion ($28.2 billion) overspend from the centre-right Conservatives.
In a much-anticipated statement to the House of Commons, Reeves vowed to make the “necessary”, “urgent” and “incredibly difficult” choices to restore the country’s economic stability.
The finance minister said the centre-left government would scrap the Restoring Your Railways Fund, scrap plans to build a tunnel at Stonehenge and review a hospital expansion programme announced by former Conservative Prime Minister Boris Johnson.
Reeves said he would cancel universal winter fuel payments for pensioners in a further bid to save money.
“If we can’t afford it, we can’t do it,” Reeves said, adding that investment cuts would not be enough to cover the deficit. She warned that “tough decisions” still lay ahead on spending, welfare and taxes.
The finance minister also said she had cancelled plans to sell NatWest shares to the public, saying the proposal put forward by his predecessor Jeremy Hunt did not “represent value for money”.
Reeves said he plans to deliver his first annual budget on Oct. 30, in what will be the new administration’s first major fiscal event.
Britain’s finance chief has previously ruled out increases in income tax, national insurance, VAT or corporation tax — the government’s main sources of revenue. However, Reeves must orchestrate a delicate balancing act given his party’s pledges to also boost domestic investment and public sector pay.
“Today she will fool absolutely no one with a blatant attempt to pave the way for tax rises,” Finance Minister Jeremy Hunt said in response to Reeves’ comments.
Hunt also criticised the finance minister for saying the state of public finances was new information for the government.
Reeves has been in office since the centre-left Labour Party guaranteed a large parliamentary majority in the country’s general elections earlier this month. His comments were visa would likely set the tone for the rest of his term as Chancellor of the Exchequer.
Speaking to CNBC on Friday, Reeves he said a Labour government would be “the most pro-growth, pro-business government” the country has ever seen.
— CNBC’s Karen Gilchrist contributed to this report.