Reeves announces spending cuts to plug £22bn black hole in finances

UK chancellor Rachel Reeves has announced a raft of spending cuts, as the new government gears up to plug a £22bn gap in public finances.

In a speech to parliament which was heavily trailed over the weekend, Reeves called for "immediate action" to fix what Labour says is a "cover up" by the previous government. Labour has previously said the Tories went "over budget" during their time in office.

On Monday, Reeves said Labour face the "worst inheritance since the second world war" and that the government had spent more than they had admitted to the public.

Reeves said the new Labour government would cut back £5.5bn in spending this year and £8bn next year.

The news comes alongside the publication of a Treasury audit on public finances. Reeling off "unfunded and undisclosed" spending, she highlighted money pledged to the asylum system, including the Rwanda programme, which she says overspent by £6.4bn. She also noted a £1.6bn overspend in the transport budget following industrial action.

Reeves said that the new government will scrap the qualification former prime minister Rishi Sunak wanted to bring in, called the advanced British standard. The scheme would have cost £200m, she said.

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Reeves also said the Rwanda programme would be cancelled and a new one would take the place of the Illegal Migration Act. The move will reduce the reliance on hotels for new asylum seekers to the UK.

She also said the £150m Investment Opportunity Fund would be cut, as "not a single project has been funded" by the initiative.

Transport projects worth £1bn will also be reviewed, with works to the A303 and A27 cancelled and the Restoring Our Railway programme mothballed.

Meanwhile, the retail share sale of banking group NatWest (NWG.L) will be cancelled in favour of more a lucrative programme.

Winter fuel credits will also be cut, apart from to households receiving pension credits. Reeves said she will work to improve the uptake of pension credit and help identify eligible households that are not claiming it.

Boris Johnson's pledge to build 40 new hospitals by 2030 is also now under review. Reeves said only one new project unveiled under this banner has opened to patients and only six have begun their main construction activity.

Labour campaigned on a promise not to raise income tax, VAT, national insurance and corporation tax. It also said it would be in a position to reduce debt by the fifth year of government. The cuts announced on Monday could pave the way for tax rises in the government's first budget, which has been announced for 30 October.

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