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Britain's new finance minister, Rachel Reeves, informed parliament that her Conservative predecessor had set public spending on a course to exceed the budget by 21.9 billion pounds ($28 billion) this year. She announced immediate cuts amounting to 5.5 billion pounds.
Reeves outlined plans for an additional 8.1 billion pounds in cuts for the next financial year and indicated that more measures would be detailed in a full budget on Oct. 30. The newly-elected Labour government will need to make "difficult decisions," including potential tax adjustments.
A portion of the financial burden results from Reeves' decision to implement pay raises for public-sector workers, costing 9.1 billion pounds in total. This follows recommendations from independent pay-setting bodies, which she said the Conservatives had long ignored.
Reeves emphasized that the current state of public finances is unsustainable and poses a risk to economic stability if not addressed.
"We must make difficult decisions now to achieve further in-year savings," she told parliament.
Labour, having won a landslide victory on July 4, has spent its first three weeks in power highlighting worse-than-expected conditions in nearly every area of public policy.
Reeves inherited an economy with sluggish growth, public sector net debt at its highest since the early 1960s, and a tax burden projected to reach a near-80-year high.
The previous government had also faced widespread industrial action across the public sector. Reeves said she would honor recommendations for above-inflation pay increases for workers such as teachers and healthcare staff.
In a statement seen by critics as laying the groundwork for future tax increases, Reeves accused the former Conservative government of concealing the true state of government spending. She asserted that difficult decisions were necessary to prevent a 25% increase in the budget deficit this year.
Reeves made cuts to various projects, including roadbuilding and railway restoration. She announced a review of a hospital rebuilding scheme and set an ambitious goal for government departments to save more than 3 billion pounds from their budgets. She also planned to save around 1.5 billion pounds per year by stopping higher-income pensioners from receiving annual heating cost payments.
Reeves commissioned a review of the public finances upon taking office and used her parliamentary announcement to criticize the previous government, which had been led at different times by Rishi Sunak, Liz Truss, and Boris Johnson.
"They made promises they knew were unfeasible: roads that would never be built, public transport that would never arrive, hospitals that would never treat a single patient."
The Conservatives dismissed her claims as a pretext for Labour to raise taxes.
"Today's exercise is not economic but political. She aims to blame the last Conservative government for tax increases and project cancellations she has been planning all along," said Jeremy Hunt, a former finance minister in the Conservative government.
Paul Johnson, director of the Institute for Fiscal Studies (IFS), noted that some funding pressures appeared greater than expected.
"Some specifics are indeed shocking and raise difficult questions for the last government," he said.
Britain's non-partisan Office for Budget Responsibility, which reviews government tax and spending plans, stated it would examine how Hunt's budget in March was prepared, calling it a serious issue.
Reeves emphasized her commitment to her party's election campaign promises not to raise the rates of income tax, value-added tax, and other main taxes.
Any other tax changes would be addressed in October's formal budget statement, where Reeves said a new set of non-negotiable fiscal rules would be presented.
Paraphrasing text from "Reuters" all rights reserved by the original author.