Rachel Reeves aims to find £40bn in budget but several ministers have written to Keir Starmer about spending cuts
Cabinet ministers have expressed strong opposition to proposed budget cuts affecting their departments, with many writing directly to Prime Minister Keir Starmer to raise their concerns. These cuts are part of Chancellor Rachel Reeves’ plan to make £40bn in savings through tax increases and spending reductions to address a £22bn funding gap left by the previous Conservative government.
Reeves has instructed departments like housing and transport, which are not protected from cuts, to prepare for reductions. However, several ministers have pushed back, arguing that these cuts contradict Labour’s pledge to invest in growth and avoid a return to austerity.
Despite these concerns, Reeves has emphasized that tough choices are necessary, especially with the UK facing a £100bn shortfall in public finances over the next five years. While Labour’s manifesto ruled out increases to income tax, VAT, or national insurance for individuals, the government is considering other measures, such as raising employers’ national insurance contributions and levying national insurance on employers’ pension contributions.
Business leaders have criticized these proposals, labeling them a “tax on jobs,” while economists, including Paul Johnson of the Institute for Fiscal Studies, have warned that such tax increases, particularly if they approach £40bn, could be unprecedented and may eventually require targeting income tax.
Inflation figures, recently reported at 1.7% in September, below the Bank of England’s target, add further complexity to the economic landscape as the government prepares its final budget announcement on October 30.
