RACHEL Reeves has said Labour will cut the cost of running government by 15% before the next General Election – but repeatedly rejected the description of austerity or of Conservative policies.
Speaking to the BBC’s Laura Kuenssberg on Sunday, it was put to the Chancellor that Labour were not “straight” with people before the 2024 General Election with claims that it could grow the economy to avoid cuts and tax rises. Since Labour taking power, the economy has largely flatlined, and both cuts and tax rises have been brought in.
Reeves said: “I made a commitment during the election, Keir Starmer made a commitment that we wouldn't increase the key taxes that working people pay. The income tax, their national insurance, and their VAT.
“Those are promises that I stuck with in the Budget last year. It meant I had to make other difficult decisions.”
The Chancellor was also presented with comments from a voter named David who had said: “When people voted Labour [to remove the Tories] they did not expect a continuation of Tory policies.”
Kuenssberg said: “You’re choosing to cut welfare, you've already taken Winter Fuel Payments from most pensioners. What do you say to David? He's looked at what you're doing and is saying, that's not a Labour government I voted for.”
Reeves responded: “At the moment we've got 1000 people a day going on to personal independence payments [PIP].
“For the people who need support, we will continue to protect them, and that's the guarantee that I will make.”
Kuennsberg then quoted a second voter, Janice, who brought up Prime Minister Keir Starmer’s claim that Labour would ask those with the “broadest shoulders” to bear the heaviest burden.
“Is this really pensioners, the sick, and the disabled? What do you say to her?” Kuennsberg asked.
“Well, at the Budget last year, we froze fuel duty, and we didn't increase the taxes that working people pay,” Reeves said.
“Their national insurance, income tax or VAT, but we did increase taxes on the wealthiest. We've got rid of the non-dom tax status, VAT on private schools. We increased capital gains tax, and we tightened up the rules around inheritance tax. At the same time, we increased taxes on business.”
The Chancellor went on to confirm plans to cut civil service costs by 15%, something she insisted would be possible due to its expansion in recent years.
“We are, by the end of this parliament making a commitment that we will cut the costs of running government by 15%, and I think anyone running a business will think that that is more than possible,” Reeves said.
“If you look at the advances in technology and AI, we're already using it at His Majesty's Revenue and Customs and the Department for Work and Pensions to tackle fraud and error in the system, using technology alongside people, but using more technology to do some of those jobs.
“If we can realise those benefits, it means that we can invest more in people working in the front line, whether it's teachers in our schools, police on our streets, or doctors and nurses in our hospitals, and that's the right thing to do.
“There hasn't been a zero base. Review of what government spends money on since 2007, that's 18 years ago. No business would run like that.
“So we've asked every department to rank all of their spending from the most important to the least, and we want to put more money into the things that are the most important things for voters, for citizens, and less money on the things that are just not necessary or we should be doing in a different way.”
She said: “Last year, I put £100 billion more into capital spending than the previous government had committed to, we put more than £20bn into the National Health Service.
“That is a far cry from what we’ve seen under Conservative governments in the last 14 years.”
Asked if there would be budget cuts to unprotected departments outside of the NHS and education, such as the Ministry of Justice, Reeves said: “We’ll set all that out when we do the spending review, but we can’t just carry on like we have been spending on the same things that the previous government spent on.
“People want to know we’re getting value for money, when people are paying more in tax that they’re getting more in return.”
