Reeves takes action to address the ‘covered-up’ £22bn shortfall in the budget

Rachel Reeves cut winter fuel payments to 10 million pensioners who are wealthier. She did this in order to plug the £22bn hole that she claimed was “covered up by the Conservative Government” and hinting towards tax increases in her first Autumn Budget.

She also axed the long-delayed limit on the amount people will pay for social services. To tackle the deficit, she urged Tory policies that she claimed would be necessary. She told MPs, “If we can’t afford it, then we won’t do it.”

Nearly half of this shortfall (£9.4bn) was due to her decision to fully fund the recommendations for public sector pay above inflation, which helped reverse years of wage decline and avert the threat of industrial actions.

Her response to an internal Treasury audit commissioned within days of Labour taking office signals a brutal budget for 30 October. She is expected to raise taxes, cut welfare and reduce public spending.

She said at a Treasury Press Conference: “We do not want to raise taxes, but there is a gap of £22bn between what the previous government budgeted and the amount they spent. We will have to take difficult decisions.”

The Treasury document describing the shortfall said that the plan to save £5.5bn by Whitehall departments in the current year would not suffice.

The government added that it would take “the difficult decisions required to secure public finances” and address the remaining spending pressures.

Jeremy Hunt, Reeves’ predecessor as chancellor said that she would “fool absolutely nobody” with the financial audit. He accused her of a “shameless effort” to lay the foundation for tax increases in her autumn budget.

Reeves, in a statement that was deeply political, blamed the Tories, while denying any increase in income tax, VAT, or national insurance. This is consistent with Labour’s election campaign promises.

She told the MPs that “after my arrival in the Treasury, three weeks ago, I realized that there were many things I didn’t know. Things that the opposite party covered up. Covered up by the opposition, from this house, and covered up by the country,” she said.

Reeves blamed a £22bn hole in the budget on the rising costs of asylum claims and illegal immigrants, which cost £6.4bn alone this year, as well as extra expenditure on the NHS and the Ukraine crisis, and maintenance roads and rails.

The independent Office for budget responsibility, which conducted a review of how departmental expenditure totals for the spring budget were calculated, supported her claim.

Richard Hughes, OBR director, stated that he only became aware of the pressures to increase spending in the last week.

As a result, the number of pensioners who receive the winter fuel allowance will drop from 11.4 to 1.5 million. The decision to apply a means test to a benefit of up to £300 to a household that has at least one person over the age of 80 is the reason for this reduction.

Treasury officials said that the cost of the payment, which was introduced by Gordon Brown’s first budget following Labour’s 1997, is currently 2 billion pounds per year. This change will be implemented this winter, and it will save £1.5bn for the next financial period.

Reeves stated that Labour would demonstrate its commitment to pensioners through the maintenance of the triple lock. Under this system, the state pension is increased each year by the earnings, inflation or at least 2.5%.

Morgan Vine, of Independent Age charity, said: “Today’s decision to stop the winter fuel payments for those who do not receive pension credits risks driving hundreds and thousands of older individuals into financial hardship.”

The chancellor has announced that he will be tackling the low take-up of the pension credit. However, if he tests the winter fuel payment, too many elderly people will not receive the financial assistance they need. This is especially true when household energy bills are still high.

Reeves can save another £1bn by not implementing reforms in social care that Sir Andrew Dilnot proposed. Reeves will save another £1bn next year by not implementing the reforms to social care proposed by Sir Andrew Dilnot.

She responded to the furious shouts of the Tory benches about the issue: “I understand why members are angered. I am angry, too. “The previous government let down the people.”

The Treasury stated that £9.4bn (£9.4bn) of the increase in spending this year is due to the decision of the chancellor to comply with the recommendations of public sector review bodies .

The Treasury’s analysis does not include a proposed 22% deal on junior doctors.

Paul Johnson, director of the Institute for Fiscal Studies said: “At the time when private sector earnings were growing between 5% and 6 % a year, pay awards in the public sector would always be higher than the budgeted 2% by departments. This was a known pressure.”

The Treasury announced that a 20% VAT would be introduced to private school fees on January 1, but parents who paid their fees ahead of time in order to avoid this additional cost will still have to pay.

The “advanced British Standard” announced by Rishi Sunder last year, to replace the A-levels and the T-levels was expected to cost £200m in the next year. However, no money had been set aside for its payment.

Boris Johnson will review his long-promised 40 hospitals and road projects to create a realistic timetable. The Stonehenge Tunnel on the A303 and the A27 Arundel Bypass will be scrapped, as well as the “restoring our rails” programme.