Budget Standoff: Government Departments Miss Deadline Amid £40 Billion Fiscal Crisis

Financial chaos looms as multiple government agencies miss the deadline to finalize their expenditure plans. Chancellor Rachel Reeves announced a £40 billion deficit that needs to be addressed before the budget, prompting calls for departments to identify potential savings.

Assistant Political Editor @SamCoatesSky

Thursday, October 17, 2024, 10:

Sky News has learned that multiple government agencies did not reach a consensus on their budget allocations by the set deadline, indicating continuing disagreements and instability concerning the budget.

Several government departments have yet to reach an agreement with the Treasury regarding the extent of budget reductions they need to implement over the coming two years, even though negotiations have been ongoing since July.

The end of the day on Wednesday marked the final deadline for all significant budget-related decisions to be submitted to the financial oversight authority, the Office for Budget Responsibility (OBR).

Latest in Politics: Minister dismisses concerns over budget reductions within the cabinet

From here on, only minor adjustments are expected in the budget and fiscal review for the upcoming financial year starting in April.

As of Wednesday evening, there was at least one department that had not yet reached a settlement and was anticipating finalizing a deal with the Treasury, indicating some eleventh-hour disruptions.

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The Treasury is downplaying the importance of the postponement, stating it's a common occurrence, yet there remains significant worry within certain government sectors about the impact of the budget.

The Treasury has dismissed claims that it is forcing budget agreements on departments that haven't settled their finances before the Chancellor's announcement on October 30.

The postponement and the associated briefings appear to indicate the challenges Chancellor Rachel Reeves and Sir Keir Starmer are facing in securing the backing of senior leadership for this budget.

Explore further: Cabinet members send urgent letters to Starmer to ease budget reductions. What might the chancellor reveal in the upcoming budget?

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It is believed that a minimum of three cabinet members reached out directly to Sir Keir, bypassing Ms. Reeves, regarding the budget.

The Treasury has consistently been open about the need for difficult choices and emphasizes that the decisions required in this budget should not come as a surprise.

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