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Cabinet ministers have been warned that they will no longer be able to take the plunge treasure Reserve Fund to Fund Facilitating Public Sector Wage Increases pressure on government finances,
The Chief Secretary to the Treasury, James Murray, has written to ministers to remind them to keep tight controls on public spending and said access to reserves will only be granted on an exceptional basis.
As part of preparations, any additional assistance given to departments will also have to be paid to the Treasury The much awaited budget of next month.
Mr Murray said: “To keep tight control over public spending, departments must take responsibility for managing pressures and making choices about priorities without relying on reserves.
“We must deliver on the efficiency plans set out in June – reducing administrative budgets, including the budgets of arms-length bodies and agencies – and delivering comprehensive digital transformation.”
chancellor Rachel Reeves Pressure rising after disappointing economic data forecasts To close the £50bn gap it will have to raise taxes or break its own fiscal rules In LaborAmount of.
But the action comes just months after Labor offered most public sector workers a pay rise above inflation shortly after coming to power.
Labor sought to end a series of strikes that had dogged the previous Tory government over pay rises – which had pushed inflation to 5 per cent to 6 per cent for most public sector workers.
While the strategy worked in the short term, only in the first year this week doctors There was a huge vote in favor of fresh in England. strike actionCiting concerns over job security and significant wage erosion.
If Cabinet ministers attempt to use reserves to close the funding gap, they will have to demonstrate to the Treasury how they have exhausted all options for finding funds through savings and cuts.
And whatever money the departments receive will have to be repaid over consecutive years.
Details of the new system came as Ms Reeves warned ministers they would be limited in getting help from Treasury funding if they failed their spending plans, when she spoke at the first cabinet meeting since Sir Keir’s reshuffle last month.
She is constrained by Labour’s manifesto commitment not to increase income tax, National Insurance and VAT – ruling out the three biggest potential revenue raisers for the Treasury.
A rebellion by Labor MPs over planned welfare reforms has blown a £5bn hole in their spending plans, while the government has also been forced to scrap its planned restrictions on eligibility for the winter fuel payment.