Labour won't turn things around immediately, Reeves says

Labour will not be able to "turn things around straight away" if elected, Rachel Reeves has said.

Speaking to the BBC's Sunday with Laura Kuenssberg, the shadow chancellor did not rule out making cuts in some areas, saying Labour would inherit the worst economy since World War Two.

She said she would be "methodically" identifying ways to pay for existing pledges on the NHS and schools.

The Conservatives said Labour "didn't have a plan" to pay for their policies.

The interview came a few days after Chancellor Jeremy Hunt set out the government's tax and spending plans in his Budget, including a cut to National Insurance and an expansion of child benefit.

Mr Hunt said the economy would "soon turn a corner" following sluggish growth which saw the country fall into a recession at the end of last year.

Emulating Labour policies, he announced he would be replacing the non-dom tax status and extending the windfall tax on oil and gas companies.

Labour had previously said it would use the £2bn it expected to raise from these changes to pay for improvements in the NHS and breakfast clubs in schools.

However, Mr Hunt has allocated these funds to help pay for the cut to National Insurance, a policy Labour has said it would not reverse if it came to power.

Asked how Labour will now make up the shortfall in funding for some of its spending commitments, Ms Reeves said she would be "going through all of the government documents to identify the funding stream to honour those commitments.

"We will do that in an orderly way."

She also pointed to the party's plans to tax private equity executives and introduce VAT and business rates in private schools.

Ms Reeves confirmed Labour would keep the government's cuts to the higher rate of capital gains tax on the sale of second homes, announced by Mr Hunt, saying the Office for Budget Responsibility had calculated that it would bring in revenue.

A general election is expected to take place later this year and with the party leading in the opinion polls, Labour's tax and spending plans are coming under increasing scrutiny.

In his Budget, Mr Hunt said he would retain a planned increase in day-to-day public spending at 1% above inflation every year until 2029.

However, this means some departments could see significant budget cuts as some areas of public spending - such as schools and health - have their funding protected.

In the immediate aftermath of the Budget, the Institute for Fiscal Studies, a public finances think tank, accused the Conservatives and Labour of a "conspiracy of silence by not acknowledging the scale of the choices and trade-offs that will face us after the election" which would include "eye-wateringly tough choices" on public service spending.

Head of the IFS Paul Johnson said unprotected departments could see day-to-day cuts of £20bn.

Asked if Labour would have to implement real-terms cuts in some areas, Ms Reeves said she was under "no illusions"adding: "It is clear that the inheritance a Labour government would have, if we do win the election, will be the worst since the Second World War.

"I have to be honest we are not going to be able to turn things around straight away but we will get to work on that."

She said Labour would boost growth through its £7.3bn investment in a National Wealth Fund - aimed at increasing private investment in the zero-carbon economy.

On Sunday, the party announced that former Bank of England governor Mark Carney and Barclays boss C. S. Venkatakrishnan would sit on a taskforce to advise Labour on how to implement the fund.

The shadow chancellor also said her party's workers' rights package - which includes giving workers full employment rights from day one - was "pro-business and pro-worker" and would be in Labour's manifesto.

Responding to Ms Reeves' interview, Chief Secretary to the Treasury, Laura Trott said Labour were unable to say how they would pay for their "unfunded spending commitments".

"That's because they don't have a plan to pay for it and that means higher taxes, taking us back to square one."