Rachel Reeves defends decisions in spending review

Rachel Reeves has defended her decisions in the upcoming spending review, as she argued a squeeze on funding is a “product of economic reality”.

In a speech in Manchester, the chancellor said “not every department will get everything that they want next week”, suggesting she had turned down requests for funding from ministers.

Reeves said her rules on borrowing to pay for public services were “non-negotiable” and insisted they were necessary because of “Conservative maltreatment” of the economy.

The chancellor also confirmed winter fuel payments will be restored to some pensioners this year, after the government U-turned on cuts to the allowance.

The government said the spending review, which will be announced on 11 June, would “scrutinise every single pound the government spends”.

The review will outline day-to-day departmental budgets over the next three years and investment budgets over the next four.

Whitehall insiders have told the BBC they expect it will be “ugly”, and that ministers have been fighting over winning small amounts of cash for their respective departments.

Reeves’s position on ruling out borrowing more money and not raising taxes again has fuelled speculation that spending cuts will be made.

The chancellor hinted there had been some friction within government over spending decisions.

The chancellor said despite a £190bn increase in funding over the spending review period “not every department will get everything that they want next week and I have had to say no to things that I want to do too”.

“That’s not because of my fiscal rules,” Reeves said.

“It is a result of 14 years of Conservative maltreatment of our public services, our public realm and of our economy.”

The Institute for Fiscal Studies (IFS) think tank has warned tough choices are “unavoidable”, with some departments facing spending cuts.

In her speech, Reeves mounted a forceful defence of her fiscal rules, as she announced £15.6bn of investment in transport infrastructure in England.

“Over the next week you will hear a lot of debate about my so-called self-imposed fiscal rules,” Reeves said.

“Contrary to some conventional wisdom, I didn’t want to come into politics because I care passionately about fiscal rules.”

The chancellor said she came into politics “because I want to make a difference to the lives of working people”, adding that she believed “economic responsibility and social justice go hand-in-hand”.

Reeves accused former Conservative Prime Minister Liz Truss of trashing market confidence with her mini-budget, which spooked global investors and led to her resignation.

The chancellor suggested Reform UK leader Nigel Farage was “itching to repeat that exact same experiment”, calling it “fantasy politics”.

“That’s why my fiscal rules are non-negotiable,” Reeves said. “Let’s be clear: It is not me imposing borrowing limits on government, those limits are the product of economic reality.”