The Treasury has warned that there is no money available for Labour's spending plans, as Chancellor Rachel Reeves prepares a pivotal review of public finances. Cabinet ministers have been ordered to find cost-cutting reforms and prepare for difficult decisions on spending.
Despite ending universal winter fuel allowance payments to pensioners to help close a £22bn black hole, the government still needs £16bn to bridge the gap this year. Chief Secretary to the Treasury Darren Jones has written to ministers demanding reforms and the use of technology to save cash.
Funding will be prioritised only for Sir Keir Starmer's 'first steps': reducing NHS waiting lists, launching a new border security command, recruiting teachers, and cracking down on antisocial behaviour. All spending requests will be tested against these priorities by newly created 'mission boards'.
Reeves has suggested that spending plans are off course and would breach Labour's fiscal rules without drastic action. She is considering tax increases on capital gains, pension contributions, and inheritance tax, as well as cutting welfare fraud and consultancy contracts.
A Treasury spokesperson said: 'The chief secretary has now written to departments, kicking off the spending review process to fix the foundations, so we can rebuild Britain and make every part of the country better off.'
