Rachel Reeves is likely to postpone a number of “unfunded” road and hospital projects on Monday as part of the Treasury’s projected intentions to put a stop to anwere mostly apparent twenty billion pound hole in expenditures that was left by the Conservatives. Additionally, she is going to make a commitment to a wage raise in the public sector that is greater than the rate of inflation, and she is going to make this announcement.
As part of her report to the Commons addressing the audit of the Treasury, it is anticipated that the chancellor would present the case that she has inherited capital projects that are “unfunded with unfeasible timelines.” This is something that is expected to be part of the presentation. The findings of the audit will be viewed as a representation of the early commitments and priorities of the government, following the conclusion of the audit.
Furthermore, it is anticipated that Reeves will accept the recommendations of public sector pay boards for pay rises that are greater than the rate of inflation on the job. Economists estimate that this course of action could cost as much as 10 billion pounds.
The capital projects that are in jeopardy include a tunnel under the Stonehenge monument on the A303 that is estimated to cost £1.7 billion; the Lower Thames Crossing, which is proposed to be a 14-mile road and tunnel east of London that is estimated to cost £9 billion; and the new hospital program that the Conservatives have proposed, which was a promise to construct or expand forty National Health Service hospitals by the year 2030.
Because of rising inflation, which has led cost forecasts to jump, large road projects that have been in the planning stages for years may be in peril. This is shown by the fact that the number of workers involved in these projects has increased. The information provided by one source indicates that a couple of these programs do not receive any financing.
It is probable that a decision about the Stonehenge tunnel will not be made until the late autumn, when the court of appeal will make a decision regarding the project. This is because the court of appeal will be concerned with the project. In light of the general election, a decision regarding the future of the Thames crossing was delayed for a period of six months. This has resulted in an increase in the level of uncertainty that is associated with its future.
Wes Streeting, the secretary of health, claimed to members of parliament on Thursday that it was “painfully clear” that the new hospital program would not be feasible to implement by the year 2030.
“I want to see the new hospital program completed, but I am not prepared to offer people false hope about how soon they will benefit from the facilities they deserve,” he stated in addition. “I really want to see the new hospital program completed.”
Millions of workers in the public sector are going to receive wage raises that are more than the rate of inflation as a result of the ideas that Reeves has put up.
It is asserted that the National Health Service (NHS) and teaching pay boards have proposed a 5.5% rise in salary for their respective positions. Additionally, it is quite probable that other pay review committees, which encompass workforces such as medical professionals and dentists, as well as those working in the military services, prisons, and law enforcement, have offered guidance that is analogous to this idea.
As a result of the salary increases, the pattern of decreasing salaries over the course of several years would be reversed, worker shortages would be addressed, and the danger of strike action would be avoided.
Reeves is expected to provide confirmation of the hikes when she presents her argument on Monday. The argument is that the Conservatives have left the government with a dreadful economic bequest, which includes a black hole of twenty billion pounds. It is anticipated that Reeves will provide confirmation of the hikes.
It is anticipated that she will explain that the pay rises are necessary in order to reduce the losses to the economy that were seen in the waves of strike action that occurred under the Conservatives. These losses were witnessed in the United States. Furthermore, this is in spite of the fact that the economic conditions are quite precarious.
The strikes that took place in 2022 and 2023 had a knock-on effect on productivity, and as part of the process, Reeves sought a report from Treasury officials evaluating the cost of industrial action to the economy. The report was required since the strikes did have an effect on productivity.
According to the findings of this study, the teachers’ strikes caused a loss of working hours that resulted in a loss of 300 million pounds for the economy. This loss of working hours occurred each day. On the other side, the total of the costs incurred by the National Health Service as a result of industrial action was £1.7 billion for American taxpayers.
The cost of delivering pay hikes to employees working in the public sector has not been fully planned for in the expenditure plans that are now in place. As a result, the funds will have to be obtained through the utilization of the headroom that is already available, through the revision of fiscal legislation, or by the implementation of tax increases within the budget.
Reeves stated that she would first need to analyze the financial records before making a decision regarding whether or not workers in the public sector would receive a pay raise. This was stated in the context of her refusal to comment on the matter prior to the election. However, more recently, she made a veiled reference to the prospect that the government could be willing to embrace the recommendations of the pay panels. She stated that there was “a cost to not settling” negotiations, which is a reference to the fact that there was a cost to not settling.
Insiders within the Labour Party have stated that the Conservative government is to blame for the twenty billion pound shortfall in public spending, according to the information provided by these individuals. They called it a “shocking inheritance” and accused the former chancellor of “presiding over a black hole and still campaigning for tax cuts and spending cuts.” They further stated that the windfall was a “shocking inheritance.”
One of the major elements that they cited was their anxiety about the amount of money spent on the asylum system, welfare, defense, and prisons. On the other hand, the audit is still ongoing, and the final amount of twenty billion pounds may be subject to change as the inspectors continue to study the spending commitments of each department.
Reeves is expected to confirm the timing of the budget, which is expected to be in the second part of October or November, as well as the plans for a spending review in her statement that will be made to the Commons on Monday. It is anticipated that Reeves will also confirm the information regarding the expenditure review.
Additionally, she will cover some of the issues that are now being faced in areas such as the asylum system, jails, welfare, defense, and local councils, as well as the strategies that the government aims to implement in the near future in order to solve these challenges. She will also describe the methods that are currently being implemented by the government.
As per the forecasts of experts, it is anticipated that Reeves will “kitchen sink” the negative news that has been reported on the economy. The fact that economists have often emphasized this position before the election makes it extremely plausible that the evaluation will arrive at the conclusion that the existing expenditure plans are not sustainable and would require considerable reductions in public services. This conclusion is quite probable because economists have consistently emphasized this opinion.