Chancellor's funding review
- Chancellor giving speech on public finances - watch and follow live
- No tax increases to be announced
- Junior doctors to be offered 22.3% pay rise
- Ashish Joshi:Top priority issue moves closer to vital resolution
- Sam Coates:Key things to watch for as chancellor announces cuts
- Live reporting by Tim Baker, Jess Sharpand (earlier)Ben Bloch
Tory leadership contest
- Six-person shortlist confirmed - with 'yellow card' system in place
- Who is running to replace Rishi Sunak?
- Jon Craig: If Badenoch wins, don't expect pleasantries or politeness
Chancellor delivering statement on public finances - live updates
The chancellor is making a series of announcements as part of a government funding review, having discovered a "£20bn black hole" in the public finances left by the previous government.
This post will be updated with the main points from Rachel Reeves's speech:
- The previous government left a budget with "pressures" of £35bn - which works out to there being a £22bn "projected overspend" once various caveats are taken into account for the current spending year;
- She says the OBR - the Office for Budget Responsibility - was not aware of some of the spending commitments;
- The asylum system was projected to be overspending by £6.4bn;
- The transport budget was projected to overspend by £1.6bn;
- The spending on military support to Ukraine did not have sufficient money set aside - but Labour will continue to honour the promises made;
- Independent pay review body recommendations for public services will be accepted "in full" - with the chancellor saying she may reform the process for responding to recommendations going forward;
- Industrial action in the NHS cost £1.7bn last year;
- An agreement with junior doctors on pay has been made, with the union recommending it to their members;
- All departments are being asked to make savings, to a total of £3bn;
- They are also being asked to find 2% savings in "back office costs";
- The Advanced British Standard, which Rishi Sunak announced last year, was forecasted to cost £200m next year, had no money set aside for it and has been scrapped;
- The Rwanda scheme has been scrapped to bring down Home Office costs by "nearly £800m this year";
- A £150m investment fund announced by Jeremy Hunt last year has been scrapped as no projects were supported;
- On levelling up, £1bn of "unfunded transport projects" have been discovered and will be reviewed;
- The Stonehenge tunnel on the A303, and the A27 Arundel bypass and the restoring our railways scheme will all be shelved as there was no money for them;
- The chancellor says the sale of the government's owned NatWest shares will be exited by 2025/2026 - but a retail share will not go ahead due to its costs;
- The 40 new hospitals previously promised will be reviewed for a "realistic" timetable;
- Reforms to the care sector have been scrapped as well to save £1bn by the end of next year;
- Only those on pension credit or means tested benefits will get the winter fuel payment going forward - those on the credit will get £200 and £300 if someone is over 80;
- The budget will face difficult decisions on spending welfare and - notably - tax;
Government agrees offer with junior doctors
The chancellor moves on to public sector pay rises next, saying she will not repeat the "mistakes" of the Conservatives, and she will accept the independent pay review recommendations "in full".
Rachel Reeves says details of these awards will be published today.
"It should not have taken this long to come to these decisions," she adds, saying she may reform the process for responding to recommendations in the future.
She points out that this will cost an additional £9bn this year, and asks all departments to "find savings" to help fund the cost.
As part of this, she confirms the government has agreed an offer with striking junior doctors.
"Today marks the start of a new relationship with the government and staff working in our National Health Service," Ms Reeves says.
Tories 'ducked difficult decisions' - and left £22bn hole in public finances
The government has inherited a £22bn hole in the public finances, the chancellor says.
Rachel Reeves tells the House the Conservative Party "covered up" the hole, and "ducked difficult decisions" knowing the money was not available.
"They exhausted the reserve, and they knew that," she says.
She adds that the reserve spend more than three times its budget over the first three months of the financial year.
She says she will set out the urgent work being taken to reduce the pressure on public finances by £5.5bn this year and more than £8bn next year.
Chancellor giving major Commons speech on public finances
Chancellor Rachel Reeves is on her feet in the Commons to deliver a statement on the state of the public finances.
She's expected to detail a raft of spending cuts to fill a "£20bn black hole" left by the previous Tory government.
But Ms Reeves is also set to pledge pay rises for public sector workers, including an offer of more than 20% for junior doctors.
She starts by paying tribute to emergency services working on the situation in Southport this afternoon, before reminding MPs she had instructed Treasury officials to assess the state of public spending.
"That work is now complete, and I am today presenting it to this House."
Follow live updates here in the Politics Hub.
Key things to watch for as chancellor announces spending cuts
By now, you are probably aware that at 3.30pm the new chancellor will tell MPs of an approximately £20bn black hole in the public finances, necessitating immediate painful spending cuts today and paving the way for tax increases in an October budget (read more here).
Rachel Reeves and her team will then challenge the Tories over who knew what and when about the shortfall, and hope this argument is ringing in voters' ears going into the summer.
But as much as Labour insist this is all a surprise - with some, though not total justification - Monday afternoon will tell us a lot we didn't know about Britain's future, with lots of clues to what's next in the fine detail and the nuance.
Below, I take a look at the key things to watch for:
PM being 'kept updated' on situation in Southport
We've now heard from Prime Minister Sir Keir Starmer.
He says he is being "kept updated" with what is going on in Southport, where at least eight people have been stabbed.
Some victims have been taken to a children's hospital.
The PM says what has happened is "horrendous and deeply shocking" and he is sending his thoughts to those impacted.
He also thanks the emergency services for their work.
Tories confirm leadership candidates - and unveil 'yellow card' system
Bob Blackman, the chair of the Tory party's backbench 1922 committee, is confirming the names of the candidates who have secured the backing of enough fellow MPs to run for the party leadership.
Six candidates have submitted valid nomination papers, Mr Blackman confirmed.
He listed the candidates, alongside their proposers and seconders:
- Kemi Badenoch, proposed by Alex Burghart, seconded by Julia Lopez;
- James Cleverly, proposed byGagan Mohindra, seconded by Peter Fortune;
- Robert Jenrick, proposed by Danny Kruger, seconded by Caroline Johnson;
- Priti Patel, proposed by Greg Smith, seconded bySaqib Bhatti;
- Mel Stride, proposed byJerome Mayhew, seconded by David Reed;
- Tom Tugendhat, proposed by Karen Bradley, seconded by Neil Shastri-Hurst.
How the contest will play out
Candidates can now campaign all over the country to convince Tory associations and their MPs that they should be the next party leader.
MPs will vote on 4 September to reduce the number of candidates. A second vote will be held the following week to reduce the number of candidates to four, if needed.
Those four candidates will speak at the party conference directly to the members, and then MPs will whittle the number of candidates down to two by 10 October at the latest.
After which, members will vote until 31 October, with the new leader to be announced on 2 November.
Mr Blackman said the party is "determined that this is going to be a good, clean contest", and explained that candidates could be given a "yellow card" if they "indulge in attacking each other".
Southport MP 'deeply concerned' after children taken to hospital in stabbing incident
Police have declared a "major incident" in Southport after at least eight people were stabbed.
Some victims have been taken to a children's hospital.
A man has been arrested, and a knife has been seized.
Patrick Hurley, the Labour MP for Southport, says he is "deeply concerned" by reports of the incident.
"I am hoping for the best possible outcomes to the casualties affected," said his statement on X.
"My thoughts go out to all those affected, their loved ones and to the entire community."
Home Secretary Yvette Cooper said she's been in touch with Merseyside's police and crime commissioner "to convey full support to the police and thanks to the emergency services responding".
Ms Cooper read out a similarly worded statement in the House of Commons when proceedings started at 2.30pm.
She says the Commons will be updated when more is known.
How public sector pay has lagged behind the private sector
While the chancellor's expected to announce a raft of spending cuts in a statement this afternoon, citing a £20bn "black hole" left by the previous Tory government, public sector workers are set for a pay rise.
Sky News understands Rachel Reeves will likely sign off on independent recommendations to give teachers and nurses above-inflation hikes of about 5.5%.
We're also reporting junior doctors are set for a 22% pay rise offer to bring long-running strikes to an end.
Combining the announcement of spending cuts and pay rises may be a difficult balancing act for Ms Reeves, but the chart below shows just why public sector workers have felt so hard done by.
As our health correspondent Ashish Joshi said earlier (see 12.33 post), the NHS can't really afford to let its staff be tempted away by the private sector if it wants waiting lists to come down.
New record for migrant crossings
The number of migrants who have crossed the Channel in small boats in 2024 has hit 16,457 - a new high for the first seven months of a year.
It comes after 255 made the journey on Sunday.
According to the Press Association, one migrant sailing in an inflatable boat down a river in France shouted "this is for Rishi Sunak" before grabbing more people from a beach near Calais.
Footage captured a group travelling on a black dinghy before reaching the Channel, where dozens of migrants waded into the water at Gravelines and pulled themselves on to the crowded boat.
That incident happened this morning.
