Britain's new finance minister, Rachel Reeves, announced spending cuts worth more than 13.5 billion pounds (about $17.3 billion) over the next two years Monday, aimed at helping to cover what she called 22 billion pounds of overspending by the previous government.
Reeves said he would present a full budget on October 30, the first by the newly elected Labor-led government. He said it would include further “tough decisions” including on tax.
The new government has also approved independent recommendations for a £9 billion pay increase for civil servants such as teachers and health service staff.
In remarks seen by critics as paving the way for future tax rises, Reeves accused the previous Conservative-led government of covering up spending and said tough decisions were needed to prevent the budget deficit from ballooning to 25 per cent this year.
“This kind of excessive spending is unsustainable. If left unchecked, it risks the stability of the economy,” Reeves told parliament. “That’s why we have to take the hard decisions now to make further savings.”
He has set out cuts to road and rail projects and said the government would review a hospital rebuilding scheme. Reeves also said he would stop high-income pensioners receiving annual payments for heating costs.
Elected to lead the world's sixth-largest economy in a landslide victory on July 4, Labor spent much of its first three weeks in power telling voters that the situation was worse than expected in almost every area of public policy.
Reeves was tasked with reviewing the public finances as soon as he took office. “They gave Britain false hope when people were already suffering from the cost of living crisis. The legacy of the previous government is unforgivable,” he said. “They promised solutions they knew would never be delivered; roads that would never be built, public transport that would never arrive, hospitals that would never see a single patient.”
Conservatives dismissed his allegations as a pretext for Labour to raise taxes. Some economists were also sceptical, saying Labour should have foreseen the biggest squeeze on spending before coming to power.
Reeves stressed that he intended to maintain his party's election campaign commitment not to raise income tax, value-added tax and other major taxes.
More tax changes could make it into the official budget statement in October, which Reeves said will contain a new set of non-negotiable fiscal rules. (uh/ab)
