Education Secretary Bridget Phillipson said all Cabinet ministers faced “really tough choices” as several were challenging demands to put forward major cuts for their departments.
She insisted that “there is no return to austerity”.
Asked what her view would be if she was being asked to find savings of 20 per cent in her department’s budget, Mr Phillipson told Times Radio on Thursday: “We all of us in the Cabinet face some very tough choices and that’s because the Conservatives left behind a massive black hole and that makes it very difficult.”
Pressed whether she felt for Housing, Communities and Local Government Secretary Angela Rayner, Transport Secretary Louise Haigh and Justice Secretary Shabana Mahmood who were reported to have raised concerns over what is being demanded from their departments, she added: “As I say, we all of us have had to confront some really difficult choices.”
In her case, she said she had faced having to sign off a 5.5 per cent pay rise for teachers which she argued had been “stored up” by Rishi Sunak’s government rather than dealing with it before the July 4 general election.
Chancellor Rachel Reeves told ministers during Tuesday’s Cabinet meeting that plans to fill what Labour calls a “£22 billion black hole” in the UK’s finances will be enough only to “keep public services standing still”.
The Treasury is said to have identified a far larger £40 billion funding gap which Ms Reeves will seek to plug to protect key departments from real-terms cuts and put the economy on a firmer footing.
The Tories deny leaving the new Labour government a £22 billion black hole.
The Chancellor is believed to be considering some form of National Insurance rise for employers, as well as hiking capital gains tax, possibly mainly on the sale of shares, to raise billions more in taxes, with speculation that inheritance tax could also go up.
It is with the Treasury rather than Sir Keir Starmer that ministers are said to be largely directing their pushback efforts, as Ms Reeves seeks to finalise her first Budget which she will deliver on October 30.
Experts have argued that ministers need to find £20 billion to avoid a squeeze on so-called “unprotected” departments pencilled in by their Tory predecessors, and billions more to prevent a sharp fall in investment spending.
Some of that could come from changing the measure the Government uses to calculate debt, but economists from the Institute for Fiscal Studies have suggested that some tax rises are all but inevitable to prevent cuts to day-to-day spending.
The Treasury often asks departments ahead of a Budget to identify a range of possible saving scenarios, causing alarm with the scale of the biggest possible cuts being sought, but then rows back to a lower figure.
Downing Street has denied that Sir Keir gave the public the wrong impression about the scale of tax rises that would come under Labour.
Asked whether the Prime Minister had misled voters, his press secretary said: “No. So we stand by our commitments in the manifesto, which was fully funded.”
However, the Tories and the Institute for Fiscal Studies say an increase in NI on employers would be a manifesto breach.
