Rachel Reeves claims to have uncovered a £21.9 billion ‘black hole’ in the former governments spending plans
In her first speech as Chancellor to the Commons yesterday, Rachel Reeves claimed to have uncovered a £21.9 billion ‘black hole’ in the former governments spending plans. Despite confirming above inflation pay-rises for public sector workers, she outlined a range of cuts aimed at combatting the deficit. However former Conservative Chancellor Jeremy Hunt has reacted with outrage, accusing Reeves of trying to ‘hoodwink’ voters and shift the blame for any future tax rises onto the previous Tory Government.
Reeves claims that the overspend covers a range of departments, including including £6.4 billion on immigration and asylum costs, in part due to the now scrapped Rwanda plan, £1.7 billion in unplanned military support for the Ukraine and £1.6 billion in payments to private rail companies to prop up the lack of passenger return post-Covid. In her initial attempt to balance the books, ahead of her first budget on 30th October, Reeves announced plans to scrap Winter Fuel payments for those not receiving pension credits or other means-tested benefits and to scrap the cap on the amount people pay for social care due to come in force in October 2025. Infrastructure projects, such as Boris Johnson’s plan to create 40 new hospitals, were cancelled and policies, such as the implementation of the Advanced British Standard (a qualification set to replace A Levels and T Levels in England), have been axed.
The cuts to social care have come under particular criticism, with 10 million pensioners set to lose out without winter fuel payments. Sir Andrew Dilnot, who put together the Conservative plan for social, called the decision to drop the cap on care costs a ‘tragedy’ and Caroline Abrahams, director of the Charity Age UK, said that older people facing ‘sky high care costs’ had been abandoned. When asked if the cap may be re-introduced in the future, Reeves said that Health Secretary Wes Sweeting will be working with the sector to increase the uptake of pension credit and improve social care.
Reeves admitted these were tough decisions but claimed tough choices had to be made. She reacted with anger to Hunt’s claims that the ‘books were open’. Hunt denied his party had covered anything up and has written to Cabinet Secretary Simon Case concerned that the claims may bring the civil service into disrepute. However, in a letter by the OBR (the Office for Budget Responsibility who are charged with providing independent analysis of public spending), published on Monday, they admit that they were only made of the true extent of the financial pressures the country was facing at a meeting with the Treasury ‘last week’, admitting it could constitute one of the largest year ahead overspends outside of pandemic years. A review will be conducted into the ‘adequacy of the information’ provided by the treasury ahead of the March 2024 budget.
(source bbc.co.uk)
