RACHEL Reeves insists the gloves are coming off to take on Labour rebels over the ballooning benefits bill.
The Chancellor throws down the gauntlet saying welfare costs can’t go “untouched” following a humiliating climb down over the summer.
Her intervention comes after a major u-turn in July costing Treasury coffers £5 billion that will have to be found in tax rises or spending cuts.
Speaking in Washington DC, Reeves said: “We can’t leave welfare untouched. We can’t get to the end of this Parliamentary session and I’ve basically done nothing.
“We have to do reform in the right way and take people with us”.
Reforms to the welfare system were abandoned over the summer as 120 Labour MPs vowed to reject plans citing the numbers that would be pushed into poverty.
However, the Chancellor is now staring at a financial black hole of up to £30 billion at next month’s Budget.
She told Channel 4 News that even the MPs who were against the changes “recognise the welfare system is not working”.
Ministers attempted to make it harder for disabled people with less severe conditions to claim benefits for Personal Independence Payments.
There was also a bid to limit sickness-related element of Universal Credit that had to be jettisoned in the wake of the rebellion.
Leading economists at the Institute for Fiscal Studies this week said the move to cut benefits would be well-received by the financial markets.
Tackling spending is seen as a “critical signal of intent” in repairing the public finances, they said.
Reeves says she is prepared to stare down any rebellion from her actions at the Budget at the end of next month.
She adds that “you have to be able to say no and you have to have that sort of toughness, discipline and that resilience”.
Reeves says: “I certainly feel like my resilience has been tested this last year but I’ve got more of it than perhaps even I knew.”
She also says that staying within the fiscal rules will see a reduction in the deficit and bring debt down within the next three years – an approach she will take into the Budget.
Reeves has been in Washington DC this week where forecasts from the International Monetary Fund show UK growth will be downgraded next year.
They also said that inflation will be the highest for this year and next across the G7 major economies.
In a personal interview, she also reflects on the moment she was seen crying in the House of Commons following the fall-out of the welfare fiasco.
The Chancellor says she will “keep going and keep fighting” to prove she can do the job. She said that “increasingly people recognise the difficult job that I have as Chancellor”.
When she was seen in tears borrowing costs rose amid speculation about her future.
But she added: “The market said very clearly that they want that discipline in economic and fiscal policy making, I offer that.”
