Rachel Reeves has cut winter fuel payments for 10 million wealthier pensioners as she sought to plug a £22bn ($28bn) black hole in the public finances she said was "covered up" by the Conservatives, while hinting at tax rises in her autumn budget.
The chancellor also shelved the long-delayed cap on what people would pay for social care as she ignited a bonfire of Tory policies she said would be needed to deal with the deficit, telling MPs: "If we cannot afford it, we cannot do it." Yet almost half of the shortfall, £9.4bn, was a result of her decision to fund above-inflation public-sector pay recommendations in full, helping to reverse years of declining wages and see off the threat of industrial action.
Her response to a Treasury internal audit commissioned by Labour within days of taking office heralds a brutal first budget on 30 October, when she is expected to increase some taxes as well as cutting welfare and public spending.
"We don't want to increase taxes but we are in a position where there was a £22bn gap between the money the previous government spent and what they budgeted for, and so we are going to have to make difficult decisions," she told a Treasury press conference.
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