Rachel Reeves Slashes Emergency Funds to Balance Public Finances

Rachel Reeves Tightens Departmental Spending Ahead of Budget In a move aimed at sticking to borrowing rules and balancing public finances, Chancellor Rachel Reeves has informed her cabinet colleagues that government departments will have limited access to the Treasury's emergency funds ahead of the budget. The 9 billion Treasury Reserve, designed for unforeseen pressures, has been used recently to fund higher public sector pay and compensation payouts. According to a letter from Reeves, the Treasury will only consider providing reserve funds to departments that have maximised their savings. This decision comes less than 11 weeks before Reeves is set to deliver Labour's Budget amid mounting pressure to boost economic growth while balancing public finances. Immediate Impact The restriction on reserve access aims to help Reeves stick to her borrowing rules by reducing government borrowing and keeping department spending within totals announced at the June Spending Review. Any funds borrowed from the reserve will have to be repaid, adding an extra layer of financial responsibility for departments. Background Context The Treasury Reserve has been used in recent years to address unforeseen pressures on public finances. However, this move marks a shift towards more stringent financial management ahead of the budget. The decision is likely to impact various government departments, including those responsible for healthcare, education, and infrastructure. What Happens Next Reeves will outline the government's tax and spending plans in the upcoming Budget, which is expected to address economic growth and public finances. The restriction on reserve access may lead to increased scrutiny of departmental spending and a focus on cost-saving measures. As the budget approaches, stakeholders will be watching closely for any further announcements or changes to the government's financial strategy. *This story is developing. Information compiled from Bbc reporting.*