Rachel Reeves has said she will "continue to drive for more productive and more efficient public services, right across government, making savings and rooting out waste wherever I find it" at this month's Autumn Budget "and beyond".
The chancellor announced £14bn of efficiencies per year to be delivered by 2029 at the 2025 Spending Review in June, but she said in a speech this morning that "there is more to do". Reeves also insisted that public services will be "protected from austerity".
She also took aim at plans from the Conservative Party and Reform UK to cut public spending.
"Reform promised savings from our public services," Reeves said. "And yet in Kent County Council, and councils they run across Britain, apparently they can’t find a single penny and instead plan to increase council tax on more than two million people. And the Conservatives, who promised £47bn, when, during 14 years in power they oversaw rising welfare costs and a growing civil service. What are they doing for 14 years?
"Let us be clear; there is no way that cuts on that scale – equivalent to cutting our entire armed forces or cutting every single police officer in the country, twice over – could be delivered without devastating consequences for our public services."
Responding to Rachel Reeves' speech this morning, PCS general secretary Fran Heathcote said: "PCS welcomes the chancellor making the case for more funding for public services, which have suffered years of austerity and underfunding.
"But at a time when the cost of living is going up, and many workers are being offered a below inflation pay increase, it's important that low and average earners are protected and that tax rises fall on those with the broadest shoulders through a wealth tax."
'Each of us must do our bit'
Reeves also warned of the impact that "years of economic mismanagement" have had on the economy in a speech ahead of a budget widely expected to include tax rises.
The chancellor said that since her first budget last year, at which she announced tax rises worth £40bn, "the world has thrown even more challenges our way", laying the ground for what is expected to be a tax-raising fiscal event later this month.
She said "we will all have to contribute to that effort" of building a better country, adding that "each of us must do our bit."
Reeves refused to be drawn on specific decisions she will take later this month, saying that her speech was about setting out the context and helping people "to understand the circumstances we are facing".
She blamed the previous Conservative government, predicting that the UK's independent public finance watchdog, the Office for Budget Responsibility, would set out that the country's productivity performance "is weaker than previously thought".
Reeves pointed to the Brexit deal negotiated by the previous Tory administration, as well as the pandemic, as reasons why the economy was under pressure.
"This isn't about relitigating old choices. It's about being honest with the people about the consequences that those choices have had. It is my job to deal with the world as we find it, not the world that I might wish it to be," Reeves said.
Reeves said that while the UK has "considerable economic strengths, "years of economic mismanagement have limited our country's potential, with long-term issues continually unchecked and potential unrealised."
The chancellor said that as decisions are made on taxes and spending, she would "do what is necessary to protect families from high inflation and interest rates, to protect our public services from a return to austerity, and to ensure that the economy that we hand down to future generations is secure with debt under control".
She added that it "will be focused on getting inflation falling and creating the conditions for interest rate cuts to support economic growth and improve the cost of living" and while she understood "the urge for easy answers", such a move would be "irresponsible".
"Any chancellor of any party would be standing here today facing the choices that I face," she said.
The speech this morning will be seen as another major indication that the government plans to raise taxes later this month, despite Reeves saying she would not come back for more after the last budget.
This article includes reporting from this article by PoliticsHome reporter Matilda Martin