LONDON, July 30 — The previous Conservative government left a “fiscal black hole” of £22 billion (RM131.2 billion) in the accounts of the United Kingdom, British Chancellor Rachel Reeves told the House of Commons yesterday, reported Xinhua.
In her speech, Reeves accused the previous Conservative government of covering up the scale of the deficit for the 2024-2025 fiscal year. She said that the Labour government would take measures to reduce spending by £5.5 billion this year and more than £8 billion next year.
Reeves also said that the Labour Party’s first budget, since coming to power, would be unveiled on October 30. This budget will outline new tax and spending plans. Additionally, she declared a review of long-term government expenditures, helping to plan budgets for at least three years for all government departments.
In terms of healthcare, Reeves said that the new government would review plans laid out by the Conservative government to build 40 new hospitals and reforms in the care sector, which had previously been criticised as being unrealistic. As of last year, only 32 of the new hospitals and renovations had been completed, according to the British National Audit Office.
The government also plans to cut winter fuel payments for some pensioners and change ministerial severance pay to cut government spending.
In the education sector, Reeves said that from January 1, 2025, a 20-per cent value-added tax will be imposed on private school fees to fund public education. In addition, the Advanced British Standard qualification, which was designed to replace secondary education at A-levels and T-Levels, has been scrapped due to its annual £200 million cost.
In response to Reeves’ accusations, current Conservative Shadow Chancellor and former Chancellor Jeremy Hunt claimed that Reeves’ speech was merely a “shameless attempt to lay the grounds for tax rises”. He questioned why Reeves only discovered the fiscal deficit now, despite having access to Treasury’s civil servants since January, and should have discovered the £20 billion “black hole” then.
In a letter sent to the Treasury Select Committee, Richard Hughes, chair of the fiscal watchdog Office for Budget Responsibility, said they were only made aware of £21.9 billion of spending pressures for the 2024-25 financial year last week. — Bernama