Chancellor Rachel Reeves MP will present her first Budget on 30 October after yesterday announcing plans for £22bn of government spending cuts to plug a hole in government finances.

She announced plans to find find £5.5bn of savings this year and £8.1bn next year.

One plan announced yesterday was a scaling back of the winter fuel allowance for pensioners. The move has already brought widespread criticism, with former Pensions Minister Baroness Altmann calling it effectively a 3% cut in the basic State Pension which should be rethought.

Ms Reeves said that a set of “non-negotiable fiscal rules” would be confirmed at the Budget on 30 October, alongside “further difficult decisions on tax and spending."

A multi-year Spending Review will conclude in Spring 2025 to, “embed mission-led government and transform public services,” she said.

Ms Reeves told the Commons yesterday that she would also increase the pay of many public sector workers as some had fallen behind rises in average earnings. Public sector workers will receive average pay awards of 5.5%.

Around £1.5bn will be saved per year by scrapping the Winter Fuel Payments for households with someone aged over State Pension age who does not receive Pension Credit, Universal Credit, Income Support, income-based Jobseeker’s Allowance and income-related Employment and Support Allowance.

She also scrapped the Rwanda migration partnership and retrospection of the Illegal Migration Act, the Investment Opportunity Fund and other small projects, the Advanced British Standard qualification and “unaffordable road and railway schemes.” She is also reviewing the New Hospital Programme which planned to build or refurbish 41 hospitals.    

Ms Reeves added that to ensure that no Government is faced with a “spending cliff-edge” again she would ensure Spending Reviews are set every two years to cover a three-year period, with a one year overlap with the previous Spending Review. As reported by Financial Planning Today yesterday, she also re-committed to a single major fiscal event or Budget once a year rather than a main Budget and several mini-Budgets or statements.   

She also outlined long-term plans to tackle “unacceptably high levels of welfare fraud” and a new Office of Value for Money. She also outlined steps to deliver tax commitments from the Labour manifesto “to provide taxpayers with certainty ahead of their final confirmation at the Budget.”  

She will press ahead too with plans to add VAT to private school fees from 1 January to help pay for the recruitment of 6,500 new teachers.

She also plans to replace the “outdated” non-domicile tax regime with a new "internationally competitive residence-based regime." She also suggested she would update policies “to help close the tax gap further.”