Rachel Reeves will today unveil plans to flog off several public buildings and plots of land.
The Chancellor will use a keynote statement in Parliament to argue that the sell-off is needed to help fill the £20billion ‘black hole’ in the public finances she claims the Tories have left.
‘Surplus’ sites owned by the NHS, Ministry of Defence and Network Rail are all being considered for sale, it is understood.
Ms Reeves will accuse the Tories of ‘covering up the true state of the public finances’ before ‘running away’.
The Opposition said Ms Reeves’s claims were a ‘con’ and ‘an insult’, and that Labour is trying to insist that the public purse is in a worse state than they thought to justify hiking taxes.
The Chancellor will also announce a fresh crackdown on the non-essential use of external consultants as part of a wider drive to cut down on waste in the public sector.
Chancellor Rachel Reeves (pictured left) has announced plans to sell off public buildings to fill a £20billion black hole in public finances
Ms Reeves pictured out jogging at St James Park in Westminster, central London on Sunday
A new Office of Value for Money will be established, using existing civil service resources, to cut down on wasteful government spending.
However, the sums raised are unlikely to come anywhere close to plugging the £20billion funding gap Labour claims it identified after Ms Reeves ordered an ‘audit’ of the spending inheritance left by the Conservatives.
Although no tax hikes are expected in today’s speech, it will pave the way for rises in her first Budget this Autumn, with higher earners set to be targeted.
Ms Reeves will also be urged to consider clobbering more than 30million drivers by Treasury officials to help plug the gap.
She is expected to look at allowing the 5p fuel duty cut to expire next March.
The 5p a litre fuel duty cut was introduced in March 2022 by then Tory Chancellor Rishi Sunak to ease the cost-of-living burden on families amid soaring oil prices.
But prices at the petrol pumps have since fallen significantly and Treasury officials believe it is time to hike the motoring tax, it is understood.
Under a range of scenarios to be presented to her by Treasury officials, Ms Reeves will also be asked to consider whether fuel duty should rise in line with inflation for future years.
The previous Tory government froze the Fuel Duty Escalator for 14 years, meaning the levy remained 57.95p a litre between 2011 and 2022 and has been 52.95p since the 5p cut.
Analysis shows the successive freezes have been worth at least £80billion to drivers collectively.
Reversing the 5p cut and allowing the Escalator to rise with inflation would add about £100 to the annual fuel bill of the average driver, of which there are around 33million in the UK.
It could net the Treasury as much as £3billion to £4billion extra a year in tax receipts. Ms Reeves refused to rule out hiking fuel duty during the election campaign, although Labour has insisted it won’t raise taxes on ‘working people’.
The Chancellor (pictured on Sunday) is expected to give a keynote statement on the economy to Parliament on Monday
The Chancellor will announce the creation of a new Office of Value for Money to cut down wasteful government spending (file photo)
Treasury officials have also drawn up plans to equalise capital gains tax with income tax and lower relief on pensions savings for up to 6million higher earners.
Ms Reeves is expected to say today: ‘Before the election, I said we would face the worst inheritance since the Second World War.
‘Taxes at a seventy year high. Debt through the roof. An economy only just coming out of recession.
‘I knew all those things. I was honest about them during the election campaign. And the difficult choices it meant.
‘But upon my arrival at the Treasury three weeks ago, it became clear that there were things I did not know. Things that the party opposite covered up from the country.’
But critics point to the fact that the watchdog the Office for Budget Responsibility (OBR) has enabled scrutiny of the public finances since being set up in 2010.
Gareth Davies, Shadow Exchequer Secretary to the Treasury, said: ‘Rachel Reeves is trying to con the British public into accepting Labour’s tax rises.
‘She wants to pretend that the OBR, established by the Conservatives and whose forecasting was used in all of the last Conservative Governments budgets, doesn’t exist in order to make any of what she says believable and just like her books, this announcement is a copy and paste of what has come decades before.
‘But her words and actions on supposedly saving the taxpayer money are an insult when she is secretly planning to raise their taxes at the same time.’
A £1.7billion tunnel running under Stonehenge (pictured) is among capital projects that are set to be dropped by Labour
In her statement tomorrow, Ms Reeves (pictured) is expected to say she has discovered ‘things I did not know’ in the Treasury that were ‘covered up from the country’
Laura Trott, Shadow Chief Secretary to the Treasury, said: ‘Having promised 50 times not to raise taxes, the British public will never forgive them when they inevitably do.’
Having ruled out hiking income tax and National Insurance during the election campaign, Ms Reeves is expected to concentrate in the short-term on axing infrastructure projects.
The savings will help fund the £8billion cost of an inflation-busting 5.5 per cent pay rise for public sector workers she is expected to sign off within days.
The £1.7billion Stonehenge road tunnel is among the capital projects inherited by the Government that Ms Reeves has concluded are ‘unfunded with unfeasible timelines’. The Conservatives’ flagship New Hospital Programme is also set to be scaled back.
A Treasury spokesperson said: ‘The Chancellor has commissioned officials to provide an assessment of the state of the Government’s spending inheritance which will be presented to Parliament before the summer recess.’
