Chancellor of the Exchequer Rachel Reeves will claim on Monday that Britain is “broken and broken” when she reveals the findings of an assessment of the country’s public finances ahead of the upcoming budget.
Reeves, who was appointed to the role after the centre-left Labor Party’s landslide election victory on July 4, will tell MPs that the previous Tory government “spent this year’s budgets by billions of pounds”.
It will say this happened through “a series of unfunded promises” and that the Tories were then “covering up the true state of the public finances”, according to the Treasury.
He added that Reeves, the first female Chancellor of the Exchequer, would vow to “restore financial stability” and “fix the foundations of our economy” in an afternoon statement to the House of Commons, expected after 3:30 p.m. (1430 GMT). .
Her plan would include government services that would deliver “savings this financial year”.
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Reeves’ first steps will also include commissioning an independent forecast from the national budget watchdog, the Office for Budget Responsibility, and confirming dates for the next budget and spending review later this year.
It is poised to commit the government to a major fiscal event annually, ending so-called surprise budgets that the ministry says have “caused uncertainty in both markets and family finances”.
Meanwhile, a new Value for Money Office will be established to curb wasteful government spending and further audit, “so that value for money underpins every decision the government makes,” the ministry said.
“Across the public sector, the new government’s assessment showed that Britain is broken and broken,” Prime Minister Keir Starmer’s Downing Street office said in a weekend statement previewing Reeves’ speech.
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Black hole;
The Conservatives have denied Labour’s claims, arguing the new government is using the fiscal review to set the stage for tax increases.
The review is widely seen as coming ahead of cuts to infrastructure spending and possible increases in some taxes — although Labor promised during the election campaign not to raise the main rates levied on workers.
The Sunday Times and other media reported that Reeves’ team identified an additional black hole in the public finances of around 20 billion pounds ($26 billion).
As a result, he plans to delay or scrap a number of unfunded rail and road projects, according to reports.
The U.K.’s deficit — the difference between what the government takes in in taxes and what it spends — was about 120 billion pounds in the 12 months to the end of March, the country’s last fiscal year.
Labor has pledged to improve the performance of public services, particularly the National Health Service and schools, which will require big spending, according to economists.
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The party, which has spent the past 14 years in opposition, has pledged to boost public sector funding mainly through enhanced economic growth — pledging to achieve the highest annual GDP growth in the G7.
Reeves has already unveiled plans to build massive housing in a bid to help spur that growth, alongside reform of the country’s antiquated planning system, a renewed focus on the green energy transition and other measures.
Labor has ruled out immediate increases in income, social security and corporate taxes. But changes to capital gains and inheritance taxes look likely to plug holes in public finances.
Source: AFP