Rachel Reeves will announce on Monday that government buildings and land will be sold off as part of efforts to help fill a £20 billion black hole in public spending.
Ministry of Defence sites, unused NHS property and Network Rail land will be considered for sale to raise hundreds of millions of pounds for the Treasury.
A ban on the use of non-essential consultants will also be unveiled as well as a new Office of Value for Money that will see a hit squad of civil servants ordered to find cost savings.
The new drives come as Ms Reeves insists she is revealing the “truth” about the scale of public spending challenges while trying to pin the blame on the Conservatives.
The Chancellor will deliver a speech to the House of Commons saying it is time to “level” with the British public about the economic inheritance left by the Tories.
Ms Reeves will say: “It is time to level with the public and tell them the truth. The previous government refused to take the difficult decisions. They covered up the true state of the public finances. And then they ran away. I will never do that.
“The British people voted for change and we will deliver that change. I will restore economic stability. I will never stand by and let this happen again.
“We will fix the foundations of our economy, so we can rebuild Britain and make every part of our country better off.”
‘Reeves is trying to con the British public’
She will publish a breakdown by government department of overspends, totalling around £20 billion a year, arguing many of them were hidden from Labour before the general election.
But the Tories have accused her of trying to “con” voters, arguing the exercise is laying the ground for tax rises, including possibly on wealth, in the autumn.
The Chancellor’s decision to announce an above-inflation pay rise for 2.5 million public sector workers, while also decrying spending pressures, is also likely to come under scrutiny.
Gareth Davies, the Tory shadow exchequer secretary to the Treasury, said: “Rachel Reeves is trying to con the British public into accepting Labour’s tax rises.
“She wants to pretend that the Office for Budget Responsibility, established by the Conservatives and whose forecasting was used in all of the last Conservative Governments budgets, doesn’t exist in order to make any of what she says believable and just like her books, this announcement is a copy and paste of what has come decades before.
“But her words and actions on supposedly saving the taxpayer money are an insult when she is secretly planning to raise their taxes at the same time.”
Ms Reeves’s audit will set the tone for the coming months as the Government prepares for “difficult decisions” on taxation and spending in the autumn Budget, the date of which she will unveil on Monday.
The Telegraph revealed higher rates of capital gains tax will be proposed by the Treasury as one revenue-raising option. Think tanks have suggested inheritance tax increases could be another. Labour promised in the election not to raise taxes on “working people”, meaning savers could be targeted.
The approach has echoes of the Tory strategy when they returned to office in 2010, which saw Lord Cameron and George Osborne pin the blame on the global financial crash on Labour’s irresponsibility. The Conservatives went on to win the 2015 general election voicing the same narrative.
Ms Reeves will announce the scrapping of some spending drives inherited by the Tories. Boris Johnson’s plan to build 40 new hospitals will be paused, with the Government saying the costs make it undeliverable.
The Restoring Your Railway Fund project, another of Mr Johnson’s 2019 election manifesto promises which vowed to bring back 45 rail lines closed in the past, will be significantly scaled back.
New drives will also be announced to save money. No decisions have been made about which parts of the government estate to sell to raise funds.
While the sale of land or buildings would be a one-off financial injection, linked ongoing maintenance and rental costs would mean there would be some annual savings.
The exact definition of “non-essential” consultants is unclear, but the announcement does show Labour’s desire to reverse the spike in consultancy fees paid out by Tory governments in recent years.
Ms Reeves will use her Commons speech, followed by a press conference, to give her decision on the recommendations from eight independent public sector pay bodies.
She is expected to generally accept the recommendations, meaning NHS workers and teachers will be offered pay rises of 5.5 per cent, despite inflation being 2 per cent.
Ms Reeves will argue: “Before the election, I said we would face the worst inheritance since the Second World War.
“Taxes at a seventy-year high. Debt through the roof. An economy only just coming out of recession. I knew all those things. I was honest about them during the election campaign. And the difficult choices it meant.
“But upon my arrival at the Treasury three weeks ago, it became clear that there were things I did not know. Things that the party opposite covered up from the country.”
The argument will be rebutted by Jeremy Hunt, who was the chancellor before the general election and has argued the Government is using “spin” to create space for tax rises in the autumn.
