Public Spending: Inheritance

Debate between Rachel Reeves and Derek Twigg

Monday 29th July 2024 Commons Chamber

[Rachel Reeves]

It was the previous Government who set the mandate for the pay review bodies. It is extraordinary that they did not include in that remit a measure of affordability, but they did not, which is why the pay review bodies made these recommendations. The previous Education Secretary could have rejected those recommendations, but she let them sit on her desk, because the previous Government were not willing to make tough decisions. We have made those decisions, including making sure that a third of the cost of these pay awards is absorbed, but there is a cost to inaction: last year, there was a £1.7 billion cost to the NHS alone because of industrial action.

[Derek Twigg (Widnes and Halewood) (Lab)]

Under the previous Government, there was at least a £17 billion black hole in defence, and of course they had hollowed out the armed forces. However, it is a surprise to find out today that not enough money was set aside in reserve to fund all the military assistance needed for Ukraine. Would the Chancellor say a bit more about that?

[Rachel Reeves]

The problem that the previous Government got into was that every time they wanted to make a commitment, they said it would be paid for from the reserve. By the time I came into the Treasury on 5 July, that reserve had been spent three times over, because they put so many commitments into that reserve that they could not afford. That is the situation that we inherited, that is where the £22 billion black hole comes from, and that is why I am having to make difficult decisions today to get a grip on the public finances.