Public sector workers are in line for a pay rise but ten million pensioners will lose out on winter fuel payments in an attempt to fill a £22bn black hole in the public finances, the Chancellor has announced.
Rachel Reeves said she was making “difficult decisions” as she accused the previous government of leaving £21.9bn of unfunded commitments that it had “covered up from the country”.
In a statement to Parliament, she set out “immediate action” to address the shortfall by £5.5bn, with the rest of the gap to be addressed at a Budget on October 30.
But predecessor Jeremy Hunt claimed around half of the “black hole” in spending was due to her deciding to give above-inflation pay rises to millions of public sector workers.
In a hint that taxes may have to increase, Reeves said: “I have to tell the House that the Budget will involve taking difficult decisions to meet our fiscal rules across spending, welfare and tax.”
She said it will be “a budget to fix the foundations of our economy and it will be a budget built on the principles that this new Government was elected on”.
One of the actions set out by the Chancellor on Monday involved introducing a means test for the winter fuel payment.
