Ms Reeves is also expected to announce that some public sector workers will be given pay rises in line with the recommendations of the independent pay review bodies. This would mean above-inflation settlements for teachers, members of the armed forces and prison staff, among others, but would mean finding the money to pay for that too.
The chancellor is said to believe that the cost of funding the deals should be weighed against the cost of the disruption to the economy from strikes and the cost of failing to recruit and retain staff.
The chancellor will also announce a new “Office of Value for Money” aimed at identifying and recommending savings, including in the current financial year, so “poor value spending is cut off before it begins”.
Last week, Home Secretary Yvette Cooper said the Conservatives’ plan to remove asylum seekers to Rwanda had cost tax payers £700m, nearly double the price tag previously in the public domain.
Other departments have identified spending needs not covered by current budget plans. On Sunday, Environment Secretary Steve Reed said his department had found the condition of flood defences to be “far worse than we were led to believe”.
The Conservative Party said the state of the public finances was clear before the election.
Former Tory chancellor Jeremy Hunt accused the new government of “peddling nonsense”. The books were “wide open and what they show is a healthy, growing economy”, he said.
Gareth Davies, shadow exchequer secretary to the Treasury, said: “[Ms Reeves’] words and actions on supposedly saving the taxpayer money are an insult when she is secretly planning to raise their taxes at the same time.”
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