Chancellor Rachel Reeves will means-test Winter Fuel Payments and tackle ‘unacceptably high’ levels of welfare fraud as part of a move to address £22 billion of ‘unfunded’ spending commitments inherited from the previous government, it was announced this week.

In a pledge to ‘restore economic stability’, the chancellor has also announced the government’s determination to reform the UK’s underperforming public services and set up an Office for Value for Money to oversee future government spending.

The series of measures have been published in a Treasury document called Fixing the Foundations drawn up following an audit of the previous government’s spending plans.

The government says the audit exposes “billions of pounds of unfunded commitments”, including the Rwanda scheme, the Advanced British Standard and the New Hospital Programme.

The Chancellor says previous government also failed to increase Departmental budgets to cover public sector pay settlements, which were £11-12 billion higher than accounted for at the last Spending review. All of which were made on top of pressures resulting from higher inflation, increased asylum costs and funding for Ukraine.

Taking immediate action, the Chancellor announced £5.5 billion of savings this year and £8.1 billion next year to tackle the overspend. She also commits to set out full fiscal plans, alongside a Spending Review, at the Budget on 30th October.

Chancellor Rachel Reeves said: “This is not the statement I wanted to give today, and these are not the decisions I wanted to make. But they are the right decisions in difficult circumstances.”

Around £1.5 billion will be saved per year by targeting Winter Fuel Payments meaning only those of state pension age in receipt of Pension Credit, Universal Credit, Income Support, income-based Jobseeker’s Allowance and income-related Employment and Support Allowance continuing to receive the winter fuel payments. The government says this will better target support for heating costs at those who need it.

The Chancellor also outlined long-term plans to tackle ‘unacceptably high’ levels of welfare fraud and error as well as addressing falling public sector productivity and a new Office of Value for Money (OVfM).

The OVfM will have two primary roles. First, to provide targeted interventions, working with Treasury and departments, so that value for money governs every decision government makes. Second, to recommend system reforms to ensure any changes support the government’s missions and deliver value for money.