Chancellor Rachel Reeves to change public finance rules to boost public spending

Rachel Reeves will rewrite the government's rules surrounding borrowing in next week's budget to allow her to increase public investment by around £50bn.

Ms Reeves said she faced difficult choices but insisted her first Budget would “begin to fix the NHS and start to rebuild our economy”.

The Chancellor told ITV: “Our second rule, our investment rule, will change the way in which we measure government debt so we take into account our assets not just the costs of investment.”

However, shadow chancellor Jeremy Hunt warned that Rachel Reeves’s actions could push up mortgage costs, saying: “The consistent advice I received from Treasury officials was always that increasing borrowing meant interest rates would be higher for longer – and punish families with mortgages."

Ms Reeves said the Government would put “guardrails” in place as it changes how debt is measured.

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The Chancellor told Sky News: “We will measure debt differently but of course we’ll put guardrails in place to ensure that every pound of taxpayers’ money spent is spent wisely, and we’ll involve the National Audit Office and the Office for Budget Responsibility in that.”

She refused to say whether she would exempt the public sector from plans reported by The Times to impose employer national insurance on pension contributions.

Asked whether she would leave the private sector carrying the burden, she said: “I was clear in the statement I made to the House of Commons in July that there will be difficult decisions in this Budget around spending, welfare and taxation.

“But the precise details I will set out to the House of Commons next week.”

She added: “The worst thing that a chancellor could do in the Budget next week is not put Britain’s public finances and Britain’s public services on a sustainable path. I’m determined to do that.”

“What’s even more remarkable is that the Chancellor hasn’t seen fit to announce this major change to the fiscal rules to Parliament. The markets are watching.”