Labour’s Rachel Reeves is set to announce plans for government department cuts and Civil Service reforms as the new administration takes aim at Chancellor Rishi Sunak for allegedly hiding economic issues. The chancellor is scheduled to address the House of Commons this afternoon, following a review of government finances since taking office at the beginning of the month.
Reeves is expected to reveal a £20bn “black hole” in the budget, which the Conservative Party argues she would have been aware of before assuming her role. The announcement will also include the date for this year’s autumn budget, with speculation that Labour may propose tax increases during the fiscal event.
Cabinet minister Pat McFadden clarified that there will be no tax hikes announced today, but that does not rule out the possibility of them in the future. The chancellor’s speech is set to begin after 3pm, depending on other parliamentary business.
Today’s announcement will outline plans for public sector cuts in an effort to save money for the current financial year. The Treasury states that Reeves “will announce immediate action to restore economic stability and deliver departmental savings this financial year.” This is expected to include accepting pay review recommendations for above-inflation pay raises for certain public sector workers, such as teachers, armed forces members, and prison staff.
Cuts are also expected to involve the suspension of road projects, including the Stonehenge tunnel, and the postponement of 40 hospital building projects. For the latest updates from Westminster, click here.
In her statement, Reeves is anticipated to declare, “It is time to level with the public and tell them the truth. The previous government refused to make difficult decisions, and they covered up the true state of the public finances. I will never do that. The British people voted for change, and we will deliver that change. I will restore economic stability and never stand by as this happens again. We will fix the foundations of our economy, rebuild Britain, and improve every part of our country.”
McFadden, the Chancellor of the Duchy of Lancaster, told reporters that the Office for Budget Responsibility (OBR), which examines government spending, will likely have to revise its forecast due to undisclosed “in-year pressures.” He accused the Conservative government of using reserve funds to pay for their asylum policy, leaving no resources for unforeseen events.
The chancellor plans to establish an Office of Value for Money (OVM) with existing Civil Service budgets to eliminate wasteful spending. The OVM will make recommendations for saving money for the public purse this year.
Additionally, new reforms will be announced to drive “efficiencies” across government departments and organizations, including the Prison and Probation Service, Met Office, Environment Agency, and HM Revenue and Customs. There will also be immediate action to cut spending on consultants and sell off surplus estates. For the Electoral Dysfunction podcast, click here.
Reeves will also state, “Before the election, I said we would face the worst inheritance since the Second World War – high taxes, soaring debt, and a fragile economy. I was honest about these issues during the campaign and the difficult choices we would have to make. However, upon starting my role at the Treasury three weeks ago, I discovered there were things I did not know – things that the opposing party concealed from the public.”
The chancellor also intends to return the UK to holding one fiscal event per year to bring stability to markets. She will also reaffirm the government’s fiscal rules, including not borrowing for day-to-day expenses and reducing debt within five years of the economic forecast.
Shadow exchequer secretary to the Treasury Gareth Davies criticized Reeves, stating, “She wants to pretend that the OBR, established by the Conservatives and used in all of the last Conservative governments’ budgets, doesn’t exist to make her statements believable. This announcement is a copy and paste of previous decades, and her words and actions on saving taxpayer money are an insult when she secretly plans to raise their taxes at the same time.”
