Chancellor Rachel Reeves admitted that some vital public services will lose out on funding in next week’s Spending Review – ‘I’m not able to say yes to everything’
Rachel Reeves will pour cash into the NHS, schools, security and firing up the economy as she hit back at fears of fresh austerity for cash-strapped public services.
The health service is expected to be the big winner in Wednesday’s Spending Review, with a 2.8% hike to the Department of Health’s annual budget – amounting to around £30billion in additional funding by 2028/29. The Mirror understands schools will also get a major boost to per pupil funding, with £4.5billion extra for the core schools budget.
But other vital services will feel the squeeze, with painful cuts expected in areas like local government and policing. On Wednesday, the Chancellor will spell out how much cash will be allocated for day-to-day budgets over the next three years.
Speaking to the Sunday Mirror in her Leeds West and Pudsey constituency, she said: “This is a far cry from what you would have had if you’d had another five years of the Conservatives – £300billion above that. Under our plan, spending will increase every year in this Parliament.
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“I tell you what austerity is, it’s what George Osborne did, where spending fell by 2% every year when he was Chancellor and [David] Cameron was Prime Minister. Spending will grow at close to 2% every year under the plans that I will lay out.”
There will be a £190billion increase in funding for day-to-day spending over the period, funded partly by tax hikes in the Budget in the autumn.
A shake-up of borrowing rules has also freed up around £113billion for capital investment for big ticket items like homes, transport and energy projects.
Security will be top of the agenda as “we live in a changed world, everyone can see that,” the Chancellor said. “The first duty of any government is to keep its people safe.”
The Government has already promised to hike defence spending to 2.5% of GDP by 2027/28, funded through a raid on the foreign aid budget.
The NHS will get a big cash injection to help the Government meet its commitment to slash waiting lists currently around 7.4million. Her other focus will be growing the economy to drive up living standards for ordinary Brits.
But Ms Reeves admitted some areas will lose out. “I’m not able to say yes to everything, and there are things that I would like to do, but we don’t have the money to do them,” she said.
“But your readers will remember two and a half years ago when a Conservative Prime Minister and Chancellor crashed the economy.
“As a result, they paid more for their mortgages and more in their rents, and readers who run their own business, particularly small businesses, found that the cost of running their business went up as inflation and borrowing rates went through the roof.
“So we have to say no to some things, because we’ve got to make sure that that stability is returned to the economy.”
This week, the Chancellor confirmed plans to rip up Treasury rules blamed for favouring investment in prosperous areas in the South of England. Instead, some £15.6billion will be handed to mayors to improve trams, trains and buses outside of London.
Ms Reeves said: “It means that people can be able to stay in the place where they grew up, the place they want to live, where their families are, but still be able to access some of those great jobs paying decent wages in the city, and they will be able to commute in easily and affordably in a way that isn’t possible today.
“That narrows down the options for lots of people about the jobs they do. Also for young people, it narrows down the options about where to go to college, what apprenticeship to take up.
“And I don’t want people’s options to be narrowed. I want people’s options and opportunities to be broadened and their aspirations to know no limits.”
But she acknowledged that voters are sceptical and said there was “no time to waste” in delivering for parts of the country betrayed by Boris Johnson’s levelling up boasts.
“We’ve got to get on with [it]”, she said. “I don’t want people waiting for another decade before they see improvements in their area.
“We’ve spoken about a decade of national renewal, but there’s no time to waste. We’re getting started.”
Pressed on whether she would deliver where the Tories failed, she said: “Yes, and the reason that I can say that to Mirror readers is because I know that there’s a lot of cynicism that things have been promised in the past.”
She added: “I’m as cynical as the next person when it comes to these promises, but we’ve set out five years worth of funding this week.”
Ms Reeves admitted she’d had to take tough decisions, including hiking national insurance contributions for businesses in the autumn Budget and plans to slash £5 billion from the welfare bill.
Labour MPs are in revolt over the decision to make up most of the welfare savings from cuts to Personal Independence Payments (Pip), which help disabled people with the added costs of daily life.
Ms Reeves said that difficult decision had allowed her to plough cash into public services and invest in the future.
She said: “We are choosing investment rather than decline. The previous government chose decline. That is not the path that we’re choosing. We’re going to renew Britain and make working people better off in the process.”
Ms Reeves said she recognised the last few years had been tough for ordinary Brits but added: “We’re beginning to turn the corner because of the choices that we’ve made.”
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‘We will reduce child poverty’
Rachel Reeves said driving down child poverty is a “moral mission” and insisted Labour would lift more kids out of hardship.
The Chancellor said the decision this week to extend free school meals to more than 500,000 additional pupils next year was a statement of intent.
From next September, all children in families receiving Universal Credit will get a free school lunch – in a major victory for the Mirror’s campaign to end hunger in the classroom.
But the Government is under intense pressure to commit to more drastic action to end the scourge of child poverty.
A long-awaited strategy has been delayed to the autumn amid mounting calls from Labour MPs for an end to the Tory two-child benefit limit, which has been blamed for pushing families into poverty.
Asked if she was listening to these calls, Ms Reeves told the Sunday Mirror: “I joined the Labour Party when I was 17 years old, because my experience at my local state school was that my sixth form was two prefab huts in the playground joined together.
“Our school library was turned into a classroom because there were more students than space and never enough textbooks to go around.”
She added: “There were loads of girls that I was at school with who did not have the opportunities. They went to school every day and probably felt that the government didn’t care very much about communities like ours and families like theirs.
“When Tony Blair talked about ‘education, education, education’, that really resonated with me, because I strongly believe that whatever your parents do, whatever income your family’s got coming in, whatever your background, you deserve a really good start in life.
“And I know that kids who are going to school in empty bellies, who don’t have a space at home to do their homework, who don’t have the opportunities of books at home, and where the mums and dads don’t have the security of a job that pays a decent wage, that they just don’t have the opportunities that other kids do. And that’s what I came into politics to do something about.”
She added: “We will lift more children out of poverty. We will reduce child poverty. That is a moral mission for all of us.”
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