Chancellor Rachel Reeves is set to outline immediate cuts to public spending to fill a £20billion “black hole” in Government expenditure.
She is expected to accuse the previous Government under the Conservative Party of of “covering up the true state of the public finances” in the Commons later today.
Reeves will break down the findings of a Treasury spending audit which will reportedly reveal billions of pounds were overspent on unfunded promises by the Tories.
As part of Labour’s new Office of Value for Money, the Government will look to identify and suggest where the Government can make savings in public expenditure.
On top of this, an office will aim to stop spending which is considered to be of “poor value”.
In her speech, Reeves will confirm reforms to prevent wasteful spending in the public sector.
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Reeves is set to announce above-inflation pay rises for public sector workers
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Infrastructure projects are reportedly on the chopping block with £500million Restoring Your Railway Fund and the A27 Arundel bypass likely to be axed or rolled back.
According to The Sunday Times, the Chancellor will refuse to pledge to create a new £1.7billion tunnel under the Stonehenge monument on the A303.
Currently, the project is in the throes of legal trouble with the Court of Appeal waiting to rule on a case brought forward by campaigners to stop the tunnel.
Notably, Reeves is rumoured to be preparing for above-inflation pay rises for millions of public-sector workers in response to the recommendations of independent pay review bodies.
Teachers and some 1.3 million NHS staff could be in line for a 5.5 per cent hike to their wages if this were to take place.
In a speech later today, Reeves is expected to say: “Before the election, I said we would face the worst inheritance since the Second World War.
“Taxes at a 70-year high. Debt through the roof. An economy only just coming out of recession. I knew all those things.
“I was honest about them during the election campaign. And the difficult choices it meant.
“But upon my arrival at the Treasury three weeks ago, it became clear that there were things I did not know. Things that the party opposite covered up from the country.”
The cost of these wage rises has not been factored into existing confirmed plans from Labour which means the Government will have to find alternative ways of generating the tax revenue.
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Cuts to infrastructure are expected to be announced
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Going into the General Election, Labour promised to not raise taxes, National Insurance or VAT on working people.
A Government spokesman has confirmed the audit had highlighted “the previous Government made significant funding commitments for this financial year without knowing where the money would come from”.
The spokesman said: “The assessment will show that Britain is broke and broken – revealing the mess that populist politics has made of the economy and public services.”
However, Shadow Paymaster General John Glen has hit back at claims that the Tories had left a £20billion “black hole”, accusing the Labour Party of “deception”.