Reeves 'must make £5bn cuts' to fund spending plans

Rachel Reeves will need to wield the axe and make nearly £5bn worth of cuts to balance the books in the wake of Labour’s spending review, new analysis has revealed.

- DAVID MADDOX, MILLIE COOKE AND KATE DEVLIN

The chancellor will today announce funding for all departments until the next election in 2029 after a bitter cabinet civil war over what is being dubbed “austerity 2.0”.

But experts have warned Labour will have to make billions of pounds of cuts to ensure Reeves can fulfil her spending plans, with areas such as housing, policing and border control expected to be in the line of fire.

The revelation comes after the Treasury was forced to impose a squeezed budget on the Home Office after a row over the settlement. Yvette Cooper’s department is expected to take the brunt of spending cuts, despite being tasked with delivering three of Sir Keir Starmer’s flagship pledges, with fears the Home Office may be forced to cut police numbers.

Savings are also expected to come from tighter budgets on local government, foreign aid, culture and the civil service.

The analysis, carried out by researchers at the House of Commons Library commissioned by the Lib Dems, found that unprotected departments, which excludes NHS England, the core schools budget and defence, could see real-terms cuts worth nearly £5bn in total by 2028/29.

The calculation, based on the assumption that Ms Reeves will not hike taxes as she has promised, was made before the chancellor committed a further £1.25bn a year to reversing the cuts to pensioners’ winter fuel payments, a U-turn which was confirmed on Monday. It also does not take into account another potential U-turn, ending the two-child benefit cap, which could cost a further £3bn.