Spending cuts What did Reeves set out and what happens next?

Rachel Reeves unveiled a series of spending cuts yesterday, with the prospect of tax rises to come in the autumn, after telling MPs about what she called £22bn in unfunded spending commitments for this financial year due to Conservative neglect.

- Peter Walker & Richard Partington

How do the sums add up?

The official Treasury table for the shortfall is slightly complex and is made up of two main sections: £35.3bn of what is called "total departmental gross pressure" - ie the presumed overspend for the 2024-25 financial year - minus £16.3bn of presumed reserves and underspends, with another £2.9bn then added for assumed shortfallsalready calculated by the Office for Budget Responsibility. This gets to £21.9bn, rounded up by Reeves to £22bn.

The £35.3bn total excess comes from: agreeing to public sector pay awards (£9.4bn); "overhang" from earlier pay awards (£2.2bn); extra health spending beyond pay (£1.5bn); asylum and migration overspend (£6.4bn); various "new policy commitments" (£2.6bn); extra costs on rail (£2.9bn); unfunded support for Ukraine (£1.7bn); and what is called "normal reserve claims" - unforeseen spending and adjustments totalling £8.6bn.

Of the less technical elements, the main ones are:

Public sector pay

Reeves announced ministers would accept the recommendations of pay review bodies for a series of pay rises for public sector workers, which are largely around 5% and so above inflation. There has also been agreement to try to end a dispute with junior doctors by giving them a 22.3% pay rise over two years.

While Reeves argued that there was an economic cost of not meeting pay claims, as her predecessor, Jeremy Hunt, pointed out for the Conservatives, this is a choice.

Asylum

Reeves said this was in part the extra costs of the Tories' Rwanda deportation scheme, and the money spent accommodating asylum seekers whose cases were not being processed as they remained in limbo pending the presumed start of flights to Rwanda. Much of this does appear to be a genuine surprise.

Rail