The UK chancellor has outlined new plans which will mean around 10 million pensioners will lose their winter fuel payments. Alongside this, a cap on social care costs and several major rail and road projects have also been scrapped. Rachel Reeves claimed she had to make “urgent decisions” due to the previous government’s undisclosed overspending. This was disputed by shadow chancellor Jeremy Hunt, as the Conservatives had been open about the state of public finances. Reeves cited a public spending audit she had requested from Treasury officials, which showed the economic legacy she had been left was “unforgivable”.
Reeves also announced that public sector pay recommendations were being accepted in full. This will mean 5.5% pay rises for NHS workers and teachers, 6% for the armed forces, 5% for the prison service, and 4.75% for the police, as well as a 22% pay increase for junior doctors over two years. The additional pay will cost £9.4bn, with central government funding two-thirds of the cost, while all departments have been asked to find savings totalling £3bn to make up the rest.
Several policies of the previous Conservative government were also cancelled, including a cap on care charges; the sale of publicly owned NatWest shares; the Rwanda deportation scheme for illegal migrants; and the Advanced British Standard. Economists and Conservative politicians criticised the decisions, calling them “political choices”. Such decisions included the pay rises and half of the spending “hole” being public pay, over which the government had made a choice and where the pressures were known.
Addressing MPs, Reeves claimed that the previous government committed to spending money it did not have and did not tell the Office for Budget Responsibility (OBR) about this. The OBR issued a letter noting that it was made aware of these pressures at a meeting with the Treasury. The OBR is reviewing how it prepared its forecast for the March 2024 Budget and will assess the adequacy of the information and assurances provided to the OBR by the Treasury regarding departmental spending. Hunt denied the previous government covered anything up and accused Labour of misleading the public on tax rises. He forecasted that Reeves’ first Budget would be the “biggest betrayal in history by a new chancellor”
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