Ms Reeves will also confirm she has commissioned an Office for Budget Responsibility (OBR) forecast to coincide with the Budget and spending review to be held later this year.

She will point to the Budget Responsibility Bill, which Labour introduced in the King’s Speech, which aims to guard against large-scale unfunded commitments in the future.

The bill will compel any Government making significant and permanent tax and spending changes worth more than 1% of the UK’s GDP to submit their plans to the OBR.

The new Chancellor will announce the action this afternoon to restore economic stability and deliver departmental savings this financial year, she said.

Ms Reeves is expected to tell the House of Commons: “It is time to level with the public and tell them the truth. The previous government refused to take the difficult decisions. They covered up the true state of the public finances. The British people voted for change and we will deliver that change.”

The announcements will be a response to the findings of the Treasury’s spending audit, which shows that the previous government overspent this year’s budgets.

It is expected Ms Reeves will cut a number of capital projects.

A new Office of Value for Money will be established, using pre-existing civil service resource, to put an end to wasteful spending in government, providing targeted scrutiny of public spending so that value for money governs every decision government makes. 

The Office will work on identifying and recommending savings for the current financial year, while establishing where targeted reforms of the system can ensure that poor value for money spending is cut.

Reforms bearing down on waste in the public sector will also be announced today with immediate action taken to stop non-essential spending on consultants, alongside disposing of surplus estates and hastening delivering admin efficiencies in departments.