Transport Secretary defends potentially unpopular decisions in Autumn Budget

Transport secretary Heidi Alexander told Sunday with Lewis Goodall that "shifting sands" meant the Chancellor faced tough choices as she puts the finishing touches to her financial plans for the next year.

But she insisted Rachel Reeves would be "laser focused" on making sure the Budget "not only cuts the cost of living but is also cutting national debt".

Reports suggest the UK's independent financial watchdog - the Office for Budget Responsibility (OBR) - has cut its productivity forecast by 0.3 percentage points.

That potentially leaves the government open to a more than £20 billion hit to the public finances.

Public sector borrowing was also higher in October than most economists were expecting - giving Ms Reeves even less wriggle room.

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Ms Alexander said: "If you think about what's happened over the last couple of months, it's become apparent that the OBR were going to conduct their review of their productivity forecasts.

"I recognise that might leave some of your listeners quite cold hearing me talk about that, but it is really important in terms of how we make the public finances stack up.

"And what they are saying is that they think that there is a bigger impact on the economy of things like the pandemic and Covid, the botched Brexit deal...essentially this process really started on some shifting sands...I don't think any of us had a crystal ball at this point last year."

Some have raised concerns that Wednesday's Budget will see Labour break its manifesto pledge not to raise taxes.

To help plug a £30 billion "black hole," the Chancellor reportedly plans to raise tens of billions by freezing income tax thresholds for two more years to 2030; imposing national insurance on salary-sacrifice schemes above a new cap, affecting pension contributions; revaluing council tax for top-band properties and adding a surcharge for the most expensive homes; and bringing in a pay-per-mile scheme for electric vehicles.

The Treasury had insisted only months ago that the move was unaffordable.

Ms Reeves has also said that the government will make a renewed attempt to overhaul the welfare system amid suggestions she could spend £3 billion to abolish the two-child benefit cap.

Heidi Alexander sidestepped questions by Lewis Goodall on whether she's confident that no manifesto promises will be broken in the Budget, instead insisting that the government is committed to investment to secure long-term economic improvement.

She said: "Ultimately, when people were voting at the election last year, they knew that the priorities of a Labour government would be to make them better off, get the economy firing on all cylinders, invest in our schools, our hospitals, our infrastructure, but also to deliver better opportunities to the next generation.

"I think that what Rachel will be doing in this week, she'll be laser focused on making sure that the Budget not only cuts the cost of living for people, cuts those NHS waiting lists, but is also cutting national debt because we've got to have a stable, strong economy in order to be able to achieve all of those other things that.

"What I think we need to do as a government is to continually assess how we can make the necessary and fair decisions to secure the long-term economic future of our country.

"I think it's right that the Chancellor is prioritising investment. It would be easy for her to say we're going to cut the investments that we're making in roads, in rail...we are going to be prioritising investment in this Budget to make sure that we're taking the right long-term economic decisions for the country."