‘Challenge’ to avoid cuts says Labour
RACHEL Reeves said she is “under no illusions” about the scale of the public spending challenge she will face if she becomes chancellor, as she declined to rule out real-terms cuts to some departments.
The shadow chancellor said she has to be “honest that we’re not going to be able to turn things around straight away”, but said the Labour Party would keep its promises on education and health spending and would hope to secure more revenue through economic growth.
Ms Reeves, pictured, acknowledged that “public services need more money” but a spending review, which would set departmental budgets, is not something she can do from opposition.
The Office for Budget Responsibility has said the current government plans “imply no real growth in public spending per person over the next five years”, while the independent Institute for Fiscal Studies accused both the Conservatives and Labour of a “conspiracy of silence” about public spending after the election.
On BBC’s Sunday with Laura Kuenssberg, Ms Reeves was asked to confirm whether there would be realterms cuts to some government spending. She replied: “It is clear that the inheritance that a Labour government would have if we do win the next election will be the worst since the Second World War.
“And I have to be honest that we’re not going to be able to turn things around straight away. But we will get to work on all of that.”
She confirmed that plans for school breakfast clubs and measures to reduce NHS waiting lists would still go ahead, even though Chancellor Jeremy Hunt has already implemented the measures to tax non-doms which would have paid for them and instead put the money towards a cut in national insurance.
“I do know that public services need more money – that’s why we will make that initial injection,” she said.
And she said Labour’s plans for a national wealth fund to bring in private investment in low-carbon projects would boost growth and increase tax revenue for the state.
She said Labour measures to tax private equity executives and impose VAT and business rates on private schools would also generate cash for public services.
Ms Reeves said she would be scouring government documents to identify additional funding streams and stressed “everything in our manifesto will be fully costed and fully funded”.
But she said she is “under no illusions about the scale of the inheritance and I do need to be honest that it’s going to take a while to turn around the challenges that we see”.
The Tories said Labour’s spending commitments on school breakfast clubs and NHS improvements were unfunded following Mr Hunt’s Budget, which deprived Ms Reeves of the non-dom funding.