Public Spending: Inheritance

Debate between Rachel Reeves and Debbie Abrahams

Monday 29th July 2024 Commons Chamber

[Rachel Reeves]

First, there is a £9 billion reserve for departmental expenditure, and it was spent three times over before I arrived in the Treasury. That is why we face these problems today.

Secondly, yes, we fully intend to set longer-term budgets for capital expenditure, but we will have three-year spending reviews every two years for day-to-day departmental expenditure, which is really important for giving certainty, so that Government Departments can plan for the future. Today, no Department or local authority knows its budget beyond next March. That is no position to put Departments in, including the Ministry of Defence.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

I welcome my right hon. Friend’s statement, and particularly what she said about the public sector pay award. Could she share a little more about how, given the appalling economic conditions that we now face, she will incorporate equity in her decisions on how to address the in-year deficit?

[Rachel Reeves]

I have to be honest that the decisions I have made today are tough decisions. They are not the decisions that I wanted to make, or that I expected to make. Given the seriousness of the inheritance that I face, they are the right decisions, the responsible decisions, and the fairest decisions that I could make in the circumstances.