Moaning Cabinet ministers were last night warned they will not get the cash to do ‘everything they want’ amidst an apparent revolt against Rachel Reeves‘ ‘tough’ public spending settlement.
The Chancellor yesterday signed off above-inflation public spending totals for the next three years ahead of this month’s Budget.
But sources said some departments will face a major squeeze as Ms Reeves funnels money towards tackling NHS waiting lists and boosting infrastructure investment, to the anger of moany ministers
A string of them, including Angela Rayner, justice secretary Shabana Mahmood and foreign secretary David Lammy have warned Sir Keir Starmer that spending cuts risk causing further damage to the new government’s reputation.
But Downing Street yesterday said that individual departments would have to learn to live within the means set by the Chancellor, even if this means ‘tough decisions’ on spending.
Labour’s Rachel Reeves yesterday signed off above-inflation public spending totals for the next three years ahead of this month’s Budget
Sir Keir Starmer speaking during a Civil Society reception at 10 Downing Street on October 17, 2024 in London
The Prime Minister’s official spokesman said some departments would have to ‘become more productive’ rather than relying on extra cash.
He added: ‘Not every department will be able to do everything they want to. There will be tough decisions taken, there will be tough conversations, but ultimately this Government has been very clear that it will fix the foundations, it will fix the position in relation to the public finances.
‘It has inherited a very difficult position, the Budget and spending review will set out that position in full.’
Downing Street said Ms Reeves had signed off the so-called public spending ‘envelope’ which sets total expenditure limits for the next three years. But some individual ministers are continuing to push back against the budgets allocated to their departments.
One source said the Treasury had demanded ‘absolutely huge’ cuts of up to 20 per cent in some departments.
But another said this was just part of the normal pre-Budget process in which the Treasury pushes ministers to prioritise before agreeing on a compromise figure.
No 10 declined to comment on the size of the public spending ‘envelope’. But the PM’s spokesman confirmed that Sir Keir will not sanction a return to ‘austerity’.
Sources said this would require increasing total spending by more than inflation, as well as filling a ‘black hole’ in spending plans inherited from the last government.
The Institute for Fiscal Studies (IFS) warned last week that taxes would have to rise by at least £25 billion just to maintain public service provision at its current level. Ms Reeves is looking to bring in tax rises and spending cuts totalling £40-£50 billion.
A Treasury insider said: ‘The Chancellor is desperate to avoid a situation where the day after the Budget the IFS accuse her of baking austerity into the government’s plans. Some departments are going to have a tough time, but overall the picture is one of spending increases, and that means tax rises to match.’
Ms Reeves will today host senior executives from major banks and insurance firms for the first meeting of the British Infrastructure Taskforce, which seeks to encourage institutional investment in major projects in the UK.
Speaking ahead of the meeting, she said: ‘Increasing investment in infrastructure is a vital part of delivering on our number one mission to grow the economy and create jobs.’
