Ministers in standoff with Reeves over planned public services cuts

IMF suggests chancellor could refine fiscal rules to avoid slashing budgets

- Jessica Elgot Rajeev Syal Phillip Inman Helena Horton

The Treasury is in a standoff with some ministers over proposed cuts to public services including policing and social housing as the IMF suggested the chancellor, Rachel Reeves, could give herself more flexibility to adjust her fiscal rules.

Senior police figures have raised concerns about the forthcoming spending review with ministers, the Guardian understands, with chief officers from some of England and Wales's biggest forces arguing they cannot take further budget cuts.

A number of key departments are yet to agree their budgets with the Treasury, including the Home Office, the Department for Environment, Food and Rural Affairs, the Department for Energy Security and Net Zero, and the Ministry of Housing, Communities and Local Government.

The International Monetary Fund suggested yesterday that Reeves could refine her fiscal framework, potentially giving her some political cover to ease off on spending cuts in response to changes in growth forecasts. It said the current system, inherited from the previous Conservative government, of twice-yearly assessments of the public finances by the Office for Budget Responsibility (OBR) was ripe for an overhaul. It said the chancellor should examine ways to avoid having to make short-term savings when there was a downturn in economic forecasts.

But government sources said there were definitively no plans to change the government's "ironclad" fiscal rules, pointing to the already high borrowing figures. One source said there were clear costs to any further changes to the rules, which were demonstrated by the market's reaction to changes to the borrowing rules at the last budget.