Rachel Reeves has unveiled spending cuts amounting to £5.5bn as the new government attempts to tackle a £22bn deficit in public finances.
In an address to the House of Commons, the Chancellor described the “inheritance from the previous government as unforgivable”.
“They spent like there’s no tomorrow because they knew someone else would pick up the bill,” she stated.
The announcement detailed the findings of an internal Treasury audit on the state of public finances, commissioned by the Chancellor upon taking office.
The audit revealed an expected overspend on departmental spending of around £22bn above the budgets outlined in the Spring Budget, as reported by City AM.
This £22bn figure includes both commitments inadequately funded by the previous government, such as support for asylum seekers and railways during the pandemic, as well as funds for a 5.5 per cent pay rise for public sector workers.
To help bridge the gap in public finances, Reeves outlined immediate plans to make savings of £5.5bn, increasing to £8.2bn next year.
To finance the public sector pay awards, the Chancellor said she has requested departments to identify savings of approximately £3.2bn, part of which will involve cutting all “non-essential” spending on communications and consultancies.
The Chancellor also announced intentions to introduce means testing on winter fuel payments, which will save £1.4bn this year.
The initiative, flagged by Labour as an effective means to assist the most vulnerable homes, will see the tally of households capable of availing winter fuel payments drop from 8.4m to a mere 1.5m.
“These are not the decisions I wanted to make. But they are the right decisions in difficult circumstances,” she relayed to the House.
In the upcoming months and prior to the Budget set for 30 October, the Chancellor will aim to alleviate funding strains further.
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