Chancellor Rachel Reeves has defended her economic decisions, including cuts to the winter fuel allowance, arguing they are necessary to restore stability after inheriting a £22bn black hole from the previous Conservative government. In a statement, Reeves said the Treasury audit revealed unfunded commitments and overspends in asylum, transport, and other budgets, with the nation's reserve spent three times over within months.
Reeves highlighted that the Office for Budget Responsibility (OBR) was unaware of the spending pressures until after the election, and the Institute for Fiscal Studies criticised the handling of asylum budgets under the Conservatives. She warned that without urgent action, market confidence could be undermined, leading to higher debt, mortgages, and prices.
The Chancellor outlined measures such as cancelling unfunded road projects, reviewing the new hospitals programme, and resolving industrial disputes through pay rises for public sector workers. She also defended means-testing the winter fuel payment to protect the most vulnerable pensioners, while maintaining the triple lock on pensions and manifesto commitments not to raise income tax, national insurance, or VAT.
Reeves emphasised that these tough choices are essential to rebuild the economy, including creating a national wealth fund and reforming planning to build 1.5 million homes. She acknowledged further difficult decisions on spending, welfare, and tax will be announced in the October budget.
