Chancellor claims budget overspends 鈥檆overed up鈥� by Tories and says 鈥檇ifficult decisions鈥� to come in autumn budget
The New Hospital Programme will be completely reviewed and a number of transport commitments scrapped, the chancellor has announced.
Addressing MPs this afternoon, Rachel Reeves said the true state of the UK鈥檚 finances had been 鈥渃overed up鈥� by the Conservative Party in government, who she accused of putting 鈥減arty before country鈥�.
Presenting the results of a detailed audit by the Treasury, she said an additional 拢35bn of budgetary pressure on government spending plans had been hidden by the previous government, resulting in a projected overspend of 拢22bn.
This gap, Reeves claimed, would result in a 25% increase in the budget deficit this year if left unaddressed.
Prior to the announcement, former Tory chancellor Jeremy Hunt had accused Reeves of being 鈥渂eyond disingenuous鈥� in claiming surprise at the state of the finances, pointing out that the Office for Budget Responsibility publishes its own assessment twice a year.
But Reeves claimed that there were specific project overspends that the OBR was not aware of in March, including 拢6.4bn on the asylum and removals system.
She set out a number of planned policies and investments that the government would axe in order to find savings, which will amount to 拢5.5 billion this year, and over 拢8 billion next year.
These include a review of transport commitments by secretary of state Louise Haigh, in advance of which a number of specific projects will be cancelled, including the A303 Stonehenge Tunnel and A27 bypass in West Sussex and the 拢85m Restore Our Rail programme.
The New Hospital Programme will also be subject to a complete review, with a 鈥渢horough, realistic and costed timetable for delivery鈥�.
Just days ago, the health secretary accused the previous government of handing over a 鈥渇ictional鈥� timeline for the programme.
Rachel Reeves revealed that the next budget would take place on 30 October and include a full economic and fiscal forecast from the OBR.
She said there would be 鈥渄ifficult decisions鈥� across spending, welfare and tax, but promised not to increase rates of NI, income tax or VAT.
Reeves said the budget would also include a multi-year spending review which will set departmental budgets for at least three years.
Reacting to the announcement, Marie-Claude Hemming, director of operations for the Civil Engineering Contractors Association, said the chancellor鈥檚 decisions were 鈥渄isappointing鈥� but would 鈥渘ot come as a shock鈥� to an industry which has been aware of funding shortfalls for some time.
鈥淭he Labour Party rightly identified economic growth as its core mission, but as ever cancelling or pausing projects that will likely need to be delivered at a later date - and at higher cost - is putting off the potential for schemes to drive growth, create jobs, and meet the needs of businesses and communities,鈥� she said.
She urged government to work with industry to identify ways to move schemes towards delivery and suggesting exploration of 鈥渘ew funding models鈥�.
鈥淭he Chancellor鈥檚 announcement that she will set a multi-year spending review to provide certainty over three year periods will be welcomed by industry as a statement of intent to deliver economic stability in the longer term,鈥� Hemming noted.
鈥淵et we urge the Government not to repeat the mistakes of previous administrations in taking an axe to capital projects without regard to future growth, and to work with industry to identify opportunities for investment that will not only deliver value for money, but will form the backbone of a net zero UK economy for years to come.鈥�
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