Rachel Reeves
is facing a battle to get the spending review over the line with four ministers said to be holding out.
The Chancellor is due to unveil the crucial three-year settlements for departments in just over a week, amid mounting pressure on the public finances.
However, she is still thought to be haggling with Ed Miliband over cash for Net Zero projects and
Angela Rayner
over housing and local government funding.
Home Secretary
Yvette Cooper
has been pushing for money for police, while Bridget Phillipson has yet to agree a package at education.
Keir Starmer
is gathering his Cabinet this morning, after a defence blueprint published yesterday threw the problems facing the government into stark relief.
The PM vowed to get Britain ‘war-ready’ as he warned of the threat from
Russia
and other hostile states. But he refused to give a firm timetable for spending 3 per cent of GDP on defence.
Sir Keir has also signalled he is ready to bow to a Labour revolt demanding restoration of the winter fuel allowance, and easing of the two-child benefit cap.
With the economy stalling, that has led to warnings he will be forced into ‘chunky’ tax rises by the Autumn unless Ms Reeves loosens her fiscal rules and borrows even more.
The spending review allocates funding to departments from within the fiscal ‘envelope’ that was set by the Chancellor at the Budget.
That package hiked taxes by around £40billion a year and changed rules on borrowing, allowing for a front-loaded splurge on day-to-day and capital spending.
But analysts always cautioned that the plans looked implausibly tight in the later years, and issues have been exacerbated by lower growth.
According to the Financial Times, Ms Cooper is demanding enough police spending to meet Labour’s crime-cutting ‘mission’.
Mr Miliband is said to be embroiled in one of the biggest disputes, over funds for the ‘warm homes’ insulation plan, carbon capture projects and GB Energy.
‘Within this spending review there is £300billion to be distributed between departments because of decisions taken by the chancellor in last year’s Budget,’ one Reeves ally told the paper.
‘The message at the spending review is we will be investing in Britain’s renewal.
‘We will be investing in the country’s security, health and economy.’
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