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An update from our Parlimentary Advisors
Chancellor of the Exchequer, Rachel Reeves has addressed the House of Commons to discuss the findings of HM Treasury’s spending review. Please find this here.
She stated that the overspending by the previous Government had reached £22 billion.
The Chancellor proposed that Labour will reduce the “black hole” by £5.5 billion this year, and over £8 billion next year.
Reeves added that the spending review, published today, details a projected overspend in the asylum system of £6.4 billion including the Rwanda relocation scheme.
With regards to public service wages, the Chancellor stated that the Government would accept the recommendations of the Public Pay Review Body to reward and retain staff.
Following this, she confirmed that the BMA have accepted an offer from the Government for the junior doctors pay dispute. The deal involves an average 22% pay rise over two years.
To tackle the overspend she attributes to the previous government, the Chancellor will first ask all government departments to absorb at least £3 billion in costs.
Reeves stated that the government will save money by abandoning the Rwanda scheme, cancelling the Stonehenge tunnel project, halting the development work on the A27, and pausing plans to restore old railway lines.
Additionally, she has decided to cancel the public sale of the government’s remaining NatWest stake, opting to sell it privately in 2025 instead.
She quoted NAO analysis on the previous Government’s lack of delivery upon the New Hospital Programme. She clarified that the Labour government will review the New Hospitals Programme for affordability and feasibility.
Reeves stated that she will deliver a Budget on October 30th.
Reeves reaffirmed her commitment not to raise taxes for working people, including National Insurance, and basic, higher, or additional rates of income tax and VAT, though she acknowledged there will be difficult trade-offs.
She also announced a multi-year spending review, which will establish the budgets for government departments for at least three years, offering “long-term certainty.”
Please find the public spending audit for 2024-25 here.
