Rachel Reeves will launch a war on waste to stabilise public finances amid growing disquiet from her MPs over her handling of the economy.
In an attempt to get back on the front foot after a week of turmoil in financial markets, the Chancellor will lead a major new drive to tackle “waste and inefficiency” across the public sector which will leave “no stone unturned”.
Writing in The Telegraph, Darren Jones, the Chief Secretary to the Treasury, said that officials will work with the private sector to “embrace their ideas, expertise and innovation to further our public services” as part of the drive to clamp down on unnecessary spending.
He added that “challenge panels” made up of external experts are being set up across every department to bring a “fresh perspective on whether every penny spent is necessary or not”.
On Monday, the Prime Minister will also launch a new government strategy on Artificial Intelligence aimed at boosting growth by encouraging more AI companies to invest in the UK.
It comes as Ms Reeves faces mounting economic pressure ahead of the Spending Review as well as questions from within her party over her tax and spending policies.
On Saturday night, Labour MPs warned that support for the Chancellor was “evaporating” even among her supporters, with some now privately calling on her to resign.
It followed a week in which the Treasury was forced to intervene to stabilise financial markets following the suggestion that rising debt costs had wiped out all of Ms Reeves’s headroom and put her in breach of her own fiscal rules.
‘Those who supported her at first are now wavering’
It came after a dramatic sell-off in the global market for government debt, fuelling a rise in the UK’s long-term borrowing costs to the highest level since 1998.
One pound in every four of the £40billion in tax rises Ms Reeves imposed in autumn has been swallowed up by rising borrowing costs as international investors waver over the scale of government debt.
Speaking from Beijing on Saturday, the Chancellor said that closer links with China are “crucial” for economic growth.
But her announcement came amid criticism from the Conservatives that she should have remained in the UK to “fix this mess of her own making”.
She was also facing mounting attacks from within her party. One Labour MP told The Telegraph: “The Government’s whole strategy depends on growth. But there is a lack of confidence. Growth depends on low energy prices, confidence, investment in infrastructure and she has done the exact opposite.”
They went on to say: “The support for her has evaporated – even those who supported her at first are now wavering” and said that there “just isn’t a solution with her in place”.
They said that Ms Reeves’ “hopeless” tenure so far is now “the first if not the second topic of conversation wherever MPs sit down and have a chat for a cup of tea or a pint of beer or bump into each other on the corridor”.
Another Labour MP said that her trip to China “smacks of desperation” and indicates that she is “running out of options” to boost growth in Britain.
“I don’t think we can continue like this until the end of the year, let alone for another four years. The whole shtick was about growth and now we are coming up against the harsh reality”.
Labour MPs cited a string of unpopular Treasury decisions including cutting the universal winter fuel payments, introducing the so-called “family farm tax” and denying compensation to the Waspi women.
“At first people were critical of the other ministers but now I think the penny is dropping that the buck stops with her,” one Labour insider said.
“She wouldn’t be under half the pressure or criticism if it wasn’t for the political own goals that she has made – it feels like one thing after another.
“Even the loyalists are becoming quietly frustrated, it is inevitable that [criticism from] the new MPs is going to get louder. It is bubbling.”
Writing in today’s Sunday Telegraph, Mr Jones adds: “When speaking to our colleagues in Cabinet, we have been abundantly clear about the mess we were left and the fiscal picture in front of us.
“Firstly, we simply cannot operate in a business-as-usual way when reviewing departmental budgets for the coming years. Secondly, when it comes to tackling waste, nothing is off the table,” he said.
“That’s why we will leave no stone unturned when it comes to rooting out waste across the public sector. Departments have been told they must find savings and efficiencies across their budgets while making sure every pound of taxpayer money is spent wisely.”
He added that Britain has “already endured years of waste and inefficiency in the public sector” and that billions of pounds have been lost.
