Treasury minister signals cutbacks in some public spending to pour more funds into dash for growth
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Rachel Reeves’ deputy has signalled cutbacks in some public spending to channel more funds into the Labour Government’s dash for growth. With the economy flatlining, ministers got a glimmer of good news on Wednesday with a surprise fall in inflation to 2.5 per cent in December.
But the public finances are under fresh strain after a spike in the cost of Government borrowing dealt a major blow to the Chancellor’s economic cushion, or so-called fiscal headroom. Chief Secretary to the Treasury Darren Jones played down the suggestion that Ms Reeves would have to deliver an emergency Budget in the spring .
But he said departments would then be told how much would be in their budgets, and this would depend on the Chanellor’s fiscal headroom, which could mean they get less than expected. He also told how Cabinet ministers will have to meet face-to-face in a room to come up with departmental savings to funnel into the Government’s priorities including growth, more homes, police, education, boosting living standards and energy.
Some areas of public spending would be “de-prioritised” to focus more money on the Government’s priorities, he added. Departments have been ordered to carry out “zero based reviews” of all their spending. Mr Jones told ITV’s Good Morning Britain: “Those group discussions that we are having - we are calling them clusters in the Treasury - are where Secretaries of State from different departments have to offer up parts of what their department does in order to deliver the outcome that we expect to be delivered for the public.
