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Chancellor Rachel Reeves has said there was a £22 billion black hole in the public finances as she accused the Tories of covering up the scale of the problems.
In a statement to Parliament she set out “immediate action” to address the issues she said had been uncovered by the audit ordered by Labour when it took office.
The chancellor said her aim was to “expose the scale of what has been uncovered” after Labour came to power.
She then set out Labour’s “immediate action” to deal with it, including cancellation and delays of major infrastructure projects, before turning to the government’s longer-term plans to fix “the foundations of our economy”.
Ms Reeves cancelled or postponed road and hospital building projects, restricted winter fuel payments to just the poorest pensioners and warned that “difficult decisions” on tax would be required in her first budget on 30 October.
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Here are the key takeaways from her speech and some of the key infrastructure cuts Ms Reeves announced:
£22 billion spending black hole
Ms Reeves told the Commons that Labour had inherited “a projected overspend of £22 billion” beyond what the previous government had planned for, which she said the Tories had “covered up”.
She said the Government would aim to recoup £5.5 billion this year, and £8 billion next year.
Budget date set with tax rises on the way
30 October will be the date of the new government’s first budget, the chancellor said.
She added it will involve taking “difficult decisions” to meet Labour’s fiscal rules, and said this would include decisions on spending and tax.
Ms Reeves did however rule out raising income tax, national insurance or VAT, as per the Labour manifesto.
A report will be published to close tax loopholes and tax avoidance to recover public finances, she added.
Other measures that could be considered are changes to capital gains and inheritance tax.
Scrapping the universal winter fuel payment
The chancellor confirmed she is ending universal winter fuel payments, which are currently paid to all pensions.
She said those not receiving pension credits or other means tested benefits will not receive winter fuel payments from this year onwards.
Under the previous plans, those born before September 25, 1957, could have received between £250 and £600 to help pay for the heating over the winter period.
Most received the grant, which was available to those on a State Pension, Pension Credit, Carers Allowance and Income Support.
Axeing Rishi Sunak’s A-level reforms
Ms Reeves has cancelled Rishi Sunak’s reforms to A-Levels to save money.
In October last year, Mr Sunak announced his plan to scrap A-levels and replace it with a new qualification called the Advanced British Standard (ABS) aimed at creating the “best education system in the western world”.
The former prime minister told the Conservative party conference last year he would merge A levels and technical T-levels into the brand new ABS to create “parity of esteem” between academic and technical subjects.
Under the plana, sixth formers would be required to study five subjects rather than three under the new ABS qualification.
Ms Reeves said the plans would costs nearly £200 million next year, and Mr Sunak had not put any money aside to pay for it.
The A303 Stonehenge project scrapped
The A303 Stonehenge project would have seen the A-road which runs alongside the historic landmark converted into a tunnel beneath it, with more lanes.
It is estimated the ongoing project will cost £1.9bn overall, and has reportedly already cost £166 million. It has been subject to legal battles since it was first approved in 2020, with work being cancelled and reopened several times.
National Highways said the project with drastically reduce travel times along the stretch of road from about an hour to just eight minutes. Campaigners argue the project will irreversibly damage Stonehenge’s surrounding landscape, which also has archeological value.
Ms Reeves confirmed the project will be scrapped.
Pay rises for doctors, teachers and other public sector workers
The chancellor said she would be “accepting in full” the recommendations of the public sector pay bodies to give workers pay rises, and said this would be in the “best interests of our economy too”.
Among the pay offers was a deal agreed with junior doctors which will see them get a 20% pay rise over two years in a bid to resolve their long-running pay dispute with the Government.
Government departments will have to find savings of at least £3 billion to help fund the public sector pay rises, which will cost £9 billion this year.
Cuts will include stopping non-essential spending on consultancy and communications, Ms Reeves said.
Office of value for money
The government will set up a new watchdog aimed at ensuring all Government spending provides value for money, the chancellor said.
She also confirmed to the Commons that a Covid anti-corruption probe would go ahead, aimed at clawing back money from Covid fraud.
