Rachel Reeves paves the way for spending cuts and tax hikes

Rachel Reeves has just announced a series of spending cuts in the House of Commons. These were ‘incredibly tough choices’, she said, to account for the £20 billion surprise ‘black hole’ left behind by the Tory government. 

Her announcement means £5.5 billion of immediate, in-year cuts. These include some projects that were tipped to be axed, including the Rwanda scheme, and a review of rail projects (which will include discarding the ‘Restoring Our Railways’ programme). But the big surprise was the decision to withdraw the winter fuel allowance for pensioners who are ‘not in receipt of pension credit or certain other means tested benefits’ from this winter onwards. It’s an estimated saving of £1.5 billion. She has also scrapped the Tory plan to cap care home costs (a major 2019 Boris Johnson pledge).

This is only the beginning Reeves said, as she announced her first Budget for 30 October. The Budget, she said, ‘will involve taking difficult decisions…across spending, welfare and tax’.