Rachel Reeves has promised the UK’s economy and living standards will improve, as she pledged to cut running costs of government by 15% and civil service jobs by 10,000.
In advance of Wednesday’s spring statement, the chancellor defended her stewardship of the economy since the election, saying she had made difficult choices.
She said she was “not satisfied with the numbers that we see at the moment”, telling Sky News: “It’s not possible within just a few months to reverse more than a decade of economic stagnation, but we are making the changes necessary to get Britain building again, to bring money into the economy.”
She said that she would stick to her fiscal rules and not raise further taxes, but said there would be cuts within central government to help her stick to her spending limits.
Reeves also hinted that the government might be prepared to scrap the £1bn-a-year digital services tax that affected large US tech companies, in order to strike a deal with Donald Trump to avoid trade tariffs.
She told BBC One’s Sunday with Laura Kuenssberg programme that the UK was in discussions with the US “around a whole range of things” related to tariffs.
Asked whether she might change the tax, Reeves said: “You’ve got to get the balance right, and those discussions at the moment are ongoing.
“We want to make progress. We do not want to see British exporters subject to higher tariffs, and we want to see trade barriers fall right across the world.”
Scrapping or watering down the tax would be controversial at a time when the government is preparing to save about £5bn on welfare costs by cutting disability benefits.
The deputy leader of the Liberal Democrats, Daisy Cooper, said the move would be “tantamount to robbing disabled people to appease [Elon] Musk and Trump”.
Reeves and Keir Starmer are facing the prospect of a Labour rebellion over the welfare changes, with unhappiness on the backbenches and also among unions about the proposed spending cuts.
Although overall government spending will increase each year, with big rises for defence and the NHS, other departments have been asked to model cuts of up to 11%.
Reeves said on Sunday that the administrative costs of government would need to be cut by 15% by the end of the parliament, and confirmed this would mean the loss of 10,000 civil service jobs.
She told the BBC’s Laura Kuenssberg on Sunday: “The world has changed and that is having an impact on growth, you can see that in every country … but do we need to go further and faster in increasing growth? Yes we do.”
Asked about a grim forecast from the Joseph Rowntree Foundation that all UK families will be worse off by 2030, with the poor bearing the brunt, Reeves disputed the findings and said living standards would rise.
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She told Sky News’ Sunday Morning with Trevor Phillips: “I reject that and the Office for Budget Responsibility will set out their forecast this week.
“Living standards in the last parliament were the worst ever on record. I’m confident that we will see living standards increase during the course of this parliament. What we’ve already seen in these last few months of the Labour government is a sustained increase in living standards.”
She was also optimistic about the prospect of avoiding tariffs from Trump’s administration in the US, saying she was confident in the ability of the UK’s trade negotiators to strike a deal.
Reeves was also pressed over having accepted free tickets to a Sabrina Carpenter concert with a family member, despite the row over Starmer’s acceptance of “freebies” last year.
She said it had not been possible to pay for the tickets offered as hospitality and she had accepted them because it was difficult to sit in general seating because of her security needs.
“Look, I took those tickets to go with a member of my family,” she said. “I thought that was the right thing to do from a security perspective.”
The chancellor later added: “These weren’t tickets that you could pay for, so there wasn’t a price for those tickets. Obviously, I’ll declare the value of them but they weren’t tickets that you were able to buy.”