By David Milliken and Kylie MacLellan
LONDON (Reuters) -Britain’s new finance minister, Rachel Reeves, on Monday announced spending cuts worth 13.5 billion pounds ($17.3 billion) over the next two years to help plug what she said was a 22 billion pound overspend caused by the previous government.
Reeves also said she had accepted independent recommendations for public sector pay increases.
In a statement seen by critics as an attempt to pave the way for future tax rises, Reeves accused the former Conservative government of covering up the true state of government spending and said she needed to make difficult decisions to prevent the budget deficit ballooning by 25% this year.
“The scale of this overspend is not sustainable. Not to act is simply not an option,” Reeves told parliament.
Elected to run the world’s sixth-largest economy in a landslide victory on July 4, Labour has spent much of its first three weeks in power telling voters that things are worse than expected in almost every area of public policy.
Reeves commissioned the review of the public finances upon taking office and the headline finding of a funding shortfall had been widely reported in the days preceding her speech.
The Conservatives dismissed her accusations as a pretext for Labour to raise taxes.
Some economists have also expressed scepticism, saying Labour could have foreseen most big pressures on spending before taking office.
Labour has stressed that it intends to stick to its election campaign commitments not to raise the rates of income tax, value-added tax and other main taxes.
Any tax changes would come in the formal budget statement later this year.
($1 = 0.7795 pounds)
(Reporting by David Milliken; editing by David Evans, Christina Fincher and Toby Chopra)
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