Funding black hole widens

RACHEL Reeves is looking to make up to £40 billion of tax rises and spending cuts in this month's Budget as the Government seeks to avoid a return to austerity, it is understood.

The Chancellor told ministers in a Cabinet meeting on Monday that plans to fill the '£22 billion black hole' she has repeatedly cited in the UK's finances will be enough only to keep public services standing still.

The Treasury is said to have identified a far larger £40 billion funding gap which Ms Reeves will seek to plug to protect key departments from real-terms cuts and put the economy on a firmer footing.

Experts have argued that ministers need to find £20 billion to avoid a spending squeeze on socalled 'unprotected' departments pencilled in by their Tory predecessors, and billions more to prevent a sharp fall in investment spending.