Chancellor Rachel Reeves today announced a series of cuts to address a public spending black hole of around £20 billion.

Ministers have in recent days sought to suggest Labour's economic inheritance from the Conservatives is worse than they expected, despite the Institute for Fiscal Studies (IFS) think tank issuing a stark warning about the state of the public finances ahead of the general election.

Reeves said earlier today on X, formerly known as Twitter: "The Conservatives left us with the worst inheritance since the Second World War.

"Today I will set out how this new Labour government will fix the foundations of our economy, so we can rebuild Britain and make every part of our country better off."

According to the Chancellor, the government inherited a £22bn hole in public finances.

She told the House the Conservative Party "covered up" the hole and "ducked difficult decisions" knowing the money was not available. 

"They exhausted the reserve, and they knew that," she said. 

She adds that the reserve spent more than three times its budget over the first three months of the financial year.

She says she will set out the urgent work being taken to reduce the pressure on public finances by £5.5bn this year and more than £8bn next year. 

Here are some key points from Reeves' speech:

  • Industrial action in the NHS cost £1.7bn last year;
  • An agreement with junior doctors on pay has been made, with the union recommending it to their members;
  • All departments are being asked to make savings, to a total of £3bn;
  • They are also being asked to find 2% savings in "back office costs";
  • The Advanced British Standard, which Rishi Sunak announced last year, was forecasted to cost £200m next year, had no money set aside for it and has been scrapped;
  • The Rwanda scheme has been scrapped to bring down Home Office costs by "nearly £800m this year";
  • A £150m investment fund announced by Jeremy Hunt last year has been scrapped as no projects were supported;
  • On levelling up, £1bn of "unfunded transport projects" have been discovered and will be reviewed;
  • The Stonehenge tunnel on the A303, and the A27 Arundel bypass and the restoring our railways scheme will all be shelved as there was no money for them
  • The chancellor says the sale of the government's owned NatWest shares will be exited by 2025/2026 - but a retail share will not go ahead due to its costs;
  • The 40 new hospitals previously promised will be reviewed for a "realistic" timetable;
  • Reforms to the care sector have been scrapped as well to save £1bn by the end of next year;
  • Only those on pension credit or means-tested benefits will get the winter fuel payment going forward - those on the credit will get £200 and £300 if someone is over 80;
  • The budget will face difficult decisions on spending, welfare and - notably - tax;

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Earlier today, Paul Johnson, the director of the IFS, told the BBC that the £20 billion public spending hole the Government is attempting to plug is roughly equivalent in scale to the cost of the Tories’ pre-election national insurance cuts.

“Now, if those cuts were implemented in the knowledge that there was this kind of hole that is not good policy to put it mildly,” he added.

Shadow transport secretary Helen Whately challenged Labour’s assertions that it would reveal new information about the public purse, as Ms Reeves “would have known about the state of the public finances” while serving in opposition because of the Office for Budget Responsibility.

Ms Whately added: “Actually while Labour is going out there and trying to tell everybody that it is all so difficult for them, this is just them setting a narrative for tax rises that they want to bring in later on.”