Chancellor warns of tax rises as winter fuel payments scrapped for some pensioners

The Chancellor has warned of future tax rises as she accused the Conservatives of leaving an "unforgivable" £22 billion black hole in the public finances.

Rachel Reeves cancelled or postponed road and hospital building projects and restricted winter fuel payments to just the poorest pensioners.

She also revealed she will have to make "difficult decisions" about tax, when she delivers her first budget on October 30.

The Chancellor accused her Conservative predecessors of covering up the scale of immediate spending pressures on the public purse.

The squeeze on spending is aimed at finding £5.5 billion of savings this year and £8.1 billion next year.

But predecessor Jeremy Hunt claimed around half of the "black hole" in spending was due to her deciding to give above-inflation pay rises to millions of public sector workers.

In a hint that taxes may have to increase, Ms Reeves said: "I have to tell the House that the budget will involve taking difficult decisions to meet our fiscal rules across spending, welfare and tax."

She said it will be "a budget to fix the foundations of our economy and it will be a budget built on the principles that this new Government was elected on".

Ms Reeves said:

• Winter fuel payments will be restricted to those on pension credits or other means-tested benefits.

• The projected overspend by the previous Tory government on the asylum system, including the "failed" Rwanda plan, was more than £6.4 billion for this year alone.

• Immediate savings include £800 million this year and £1.4 billion next year from scrapping the Rwanda migration partnership and scrapping retrospection of the Illegal Migration Act.

• Some £70 million will be saved by cancelling the Investment Opportunity Fund and other small projects, £185 million next year from cancelling the Advanced British Standard and £785 million next year from stopping road and railway schemes.

• The Tory plan to build 40 new hospitals will also be subject to a "complete review".

Ms Reeves said she would accept in full the recommendations of the independent pay review bodies, saying this was the "right decision for the people who work in, and most importantly, the people who use our public services".

She said the Government has agreed a pay offer to junior doctors to end the long-running dispute in England.

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