Politics latest: Chancellor unveils huge cuts – as new policies not in manifesto ‘appear from nowhere’ | Politics News

By Paul Kelso, business correspondent

Rachel Reeves said she would not back off “difficult” choices and, in her first major intervention as chancellor, was as good as her word – announcing spending cuts that will make some of her own MPs wince.

Almost 10 million pensioners will no longer receive the winter fuel allowance, as Ms Reeves saves £1.4bn by moving to means testing of the benefit. 

Currently, anyone of pension age, around 11.4 million people, receives £200 regardless of income, and £300 if they are over 80.

That will shrink to around 1.5 million as only those who receive pension credits remain eligible – a bracing cut in a world in which energy prices remain almost twice as high as they were before the war in Ukraine.

Social care reform also takes a hit, with long-delayed reforms finally killed stone dead more than a decade after Sir Andrew Dillnot first presented them to David Cameron. 

Scheduled to come in next year and capping social care costs to £100,000, at a cost to the Treasury of more than £1bn, the chancellor says they were never funded or affordable, and will be replaced by alternative reforms that are both.

A big black hole – but chancellor adds to it with choice of her own

These, and all the other cuts announced today from the Stonehenge tunnel to the Rwanda scheme, are to reduce unbudgeted cost pressures the chancellor says she cannot have foreseen.  

They bring the total pressure down from £21.9bn to £16.4bn, a figure that will be addressed in the budget and spending review that follow in the autumn.

But far the largest component of this is public sector pay, a £9.4bn cost that arises by virtue of a clear choice by Ms Reeves to accept the recommendations of pay review bodies. 

The alternative to above-inflation pay rises, the chancellor will say, would be further industrial action and costs to the NHS that have pushed up spending in the first place.

But it remains a choice, so expect it to be the frontline in the political debate over whether Ms Reeves can credibly claim not to have known about the cost pressures she is today acting to address.