Labour’s plans to nationalise the railways and form its own energy investment company - so, after the previous planning exchange, Laura asks whether Reeves thinks "government knows best" .

Reeves points to Labour’s housing plan, which involves local targets for new houses, as an example of power in the community.

She says there must be government-mandated housing targets because house ownership is going backwards, fewer people can get into the market, and rents are “through the roof”.

Kuenssberg puts it to Reeves that the level of involvement proposed by the government is “control freakish”.

Reeves responds that most people think the projects, such as the rail nationalisation, is an improvement - and that Labour was elected to change things.

"Things aren't going to carry on as they were," she says. "We're not about the status quo."

The chancellor is asked about a 2,500-acre energy farm on the Cambridgeshire-Suffolk border.

Sunnica's £600m solar farm was given the green light on Friday, despite opposition from the local council and residents.

Kuenssberg asks if some communities are "going to have to suck it up" when it comes to infrastructure projects.

"We are going to have to make tough decisions and I'm not going to shy away from that," she says.

Reeves talks about the UK's reliance on foreign energy, including from Russia, and says she's "not willing for our country to be at the mercy of dictators in that way".

"We can't just keep saying no to investment projects...if we do our economy will continue like it has been and that's not delivering for working people."

She adds that people "should get something in return".

The interview shifts to pension reforms.

Reeves says a new pensions bill will address two issues – firstly, that people deserve returns on their savings.

"Pensions aren't delivering for people," she says.

And second, money invested in schemes is “not working well enough” for the wider economy.

She says there is, or will be in the next few years, £800bn worth of defined contribution pension savings and £360bn in local government pension schemes.

Unlocking 1% of money in defined contribution schemes for investment in “more productive assets”- it would result in £8bn to finance growth and prosperity in Britain, she adds.

Kuenssberg suggests a 5.5% pay increase for public service workers could “blow the budget”.

"That is a huge amount of money that was not planned for," Laura says.

In response, Reeves says that every government budget will be done “in the proper way and make sure the sums add up” with an OBR review.

She points to the Liz Truss mini-budget in 2022 as an example of the danger of unfunded commitments - and says that in contrast, fiscal responsibility is the "cornerstone of everything I’ll do" as chancellor.

Kuenssberg pushes Reeves on whether she would - in principle - ignore recommendations for public sector pay increases.

As a reminder, pay review bodies are recommending a 5.5% increase for teachers and some NHS workers.

Reeves deflects the question, saying: "We are in a situation where there are huge spending pressures and our economy is so weak it is not generating the tax revenues that we need to fund our public services.

"This is why we have to grow our economy, otherwise, we'll just continue for the next five years having these conversations of 'how can you afford this, how can you afford that'."

She also again stresses the cost of "not settling", in terms of recruitment, and possible strike action.

Laura now puts to Reeves that the 5.5% pay rise recommendation made by public sector pay review bodies is more than is budgeted for.

She asks whether Reeves would be prepared to ignore the recommendations, in order to save public money.

Reeves stresses she “really value[s]” public service workers, in schools, hospitals, and police.

She adds that she is looking at the recommendations and plans to work with public sector workers on this.

She will make announcements on public sector pay later this month, but - as we've already reported - stresses there is also a “cost to not settling”.

Reeves is to give an example of information about the scale of the challenge not already publicly available.

She refers to the prison system: “I don’t think anyone realised how bad things were."

She says the previous government “simply ran away” from the issue of prisons being in crisis when they called an election and put it upon “the next people” - her party - to make tough decisions.

Challenged by Kuenssberg that information about prisons - like the public finances - has been in the public domain, Reeves says this is “simply not the case”.

She then claims the former education secretary had the pay review body recommendation for teachers on her desk “and didn’t do anything about it”.

Laura asks the chancellor what she's learnt about the public finances since Labour came into power.

Reeves confirms she's ordered a review of public finances and will present the findings to Parliament by the end of July.

She says the "scale of the challenge" is going to be "immense". Things are a "mess", she adds.

"I'm going to level with people about the scale of the challenge and then begin to fix the foundations, so we can start rebuilding our country and economy," she says.

We're now seeing Laura Kuenssberg’s interview with new chancellor Rachel Reeves - filmed at 11 Downing Street.

Reeves begins by telling Kuenssberg she’s “getting used to” being in the post but laughs adding “I do have to pinch myself occasionally”.

She reflects on the last time she appeared on the programme – at the start of the election campaign – when it was put to her that she might soon be chancellor.

“I feel very proud and privileged to be in this position - especially as the first female chancellor of the exchequer that this country has ever had,” she tells Laura.

Sunday with Laura Kuenssberg has just started.

You can follow along by clicking Watch live at the top of the page.

We'll also bring you the key lines here.

Various parts of the public sector have pay review bodies - independent panels that advise government on annual pay awards.

That's where this latest announcement has come from - bodies representing over 500,000 teachers and 1.36m NHS workers have made a recommendation for a 5.5% rise (as a reminder, inflation is 2%).

Other bodies will make their own recommendations for their sectors.

As well as pay - they may also make recommendations on other forms of remuneration such as pensions, overtime pay, and annual leave.

The Institute for Fiscal Studies says such bodies represent around 45% public sector staff across eight areas including the armed forces, police and the prison service.

But they don't have the final decision on pay - that's a decision for the government.

The Institute for Government has an explainer page on this here, external.

Here's an early clip of Rachel Reeves, from the full interview you can watch live from 09:00 BST.

Laura asks the chancellor if she is willing to give teachers and some NHS workers the 5.5% pay increase proposed by independent pay review bodies...

Good morning and welcome to our live coverage of Sunday with Laura Kuenssberg.

Laura's main guest this morning is Chancellor Rachel Reeves - and, as pay review bodies suggest a 5.5% increase for teachers and some NHS workers, she suggests she's open to it.

"There is a cost to not settling, a cost of further industrial action, and a cost in terms of the challenge we face recruiting," she says in the pre-recorded interview.

Reeves also again says the new Labour government won't lift the two-child benefit cap.

"It costs more than £3bn a year," she says. "If we're not able to say where the money is going to come from, we can't promise to do it."

We're also going to hear live from shadow chancellor Jeremy Hunt, plus a panel of guests - Zarah Sultana MP, economist Stephanie Flanders, and impressionist Jon Culshaw. Stay here for all the breaking lines, analysis, and clips.

And remember - you can watch live from 09:00 BST by pressing (you guessed it) watch live at the top of the page.