Rachel Reeves to cut billions from welfare budget to balance books
Under-fire Rachel Reeves has signalled painful spending cuts are on the way as she vowed to “take action” to balance the books.
The Chancellor will slash billions from the welfare budget after market turmoil wreaked havoc on the nation’s finances.
Chancellor Rachel Reeves has signalled painful spending cuts are on the way
But she faces a growing Cabinet revolt as government insiders warn that some departments are already “cut to the bone” and will struggle to make more savings.
Ms Reeves is also facing a barrage of criticism from within government ranks for being too gloomy ahead of the Budget, putting investors off and sending the economy spiralling into a doom loop.
After a press conference in Beijing, Ms Reeves told journalists: “I have been really clear that our fiscal rules are non-negotiable — that we will pay for day-to-day spending through tax receipts and we will get debt down as a share of GDP.
“Those fiscal rules that I set out in the Budget in October are non-negotiable and we will take actions to ensure we meet them.”
Her comments signal much deeper public sector cuts than previously expected — after she promised business she will not clobber them with more tax hikes.
The under-fire Treasury chief spoke out after days of market turmoil sparked fears of a 1970s-style stagflation crisis.
Labour has already promised to slash £1.3billion from the sickness and disability benefits bill every year — with more details coming in the spring.
And the Sun on Sunday has been told the Treasury wants to go further — with more measures to get people back to work.
The Chancellor is scrambling to come up with ways to reassure the markets after a disastrous week overshadowed her trip to China.
She will deliver a growth speech at the end of the month where she will spell out plans to cut red tape, boost trade and usher in market reforms to boost the economy.
The Chancellor is scrambling to come up with ways to reassure the markets after a disastrous week overshadowed her trip to China.
She will deliver a growth speech at the end of the month where she will spell out plans to cut red tape, boost trade and usher in market reforms to boost the economy.
“If you want to go all-guns- blazing on growth, this stuff doesn’t make sense.”
Last year, several ministers wrote formal letters to the Treasury and PM Keir Starmer objecting to the scale of the cuts demanded of them.
The market turmoil over recent weeks has led some in Westminster to suggest that Ms Reeves could even be sacked as Chancellor if she does not turn things around.
But most Labour ministers and aides think it is “not that bad yet” and point out that Sir Keir and Ms Reeves have worked “hand in glove”.
One said: “I don’t think Reeves is going anywhere any time soon.”
Behind the scenes, many in government are openly questioning why Ms Reeves has not come up with a growth plan sooner. One said: “She is meant to be in charge of growth. What has taken her so long?”
All eyes will be on the markets tomorrow. If the cost of borrowing rises further, Ms Reeves will find herself under fresh pressure.
