Britain’s new chancellor has accused the previous government of covering up the dire state of the country’s public finances as she prepares to deliver a speech to parliament expected to lay the groundwork for spending cuts and tax increases.
In extracts of her speech released on Sunday night, Rachel Reeves expressed shock at the scale of the problems she uncovered after a department-by-department review of public spending shortly after taking office three weeks ago.
Although the excerpts do not include figures, Reeves is expected to describe a £20 billion ($26 billion) deficit in the public finances.
“It is time to be honest with the public and tell them the truth,” Reeves will tell the House of Commons.
“The previous government refused to take difficult decisions. It hid the true state of public finances. And then it fled,” he added.
The left-leaning Labour Party led by Prime Minister Keir Starmer won a landslide election victory earlier this month, ending 14 years of Conservative rule.
During the campaign, critics accused both sides of a “conspiracy of silence” about the scale of the financial challenges facing the next government.
During the election campaign, the Labor Party promised not to raise taxes on “workers”, saying its policies would deliver faster economic growth and the extra revenues the government needs.
Meanwhile, the Conservatives have promised more tax cuts in the fall if they return to power.
As evidence that the previous government was not honest about the challenges facing the UK, Starmer’s office highlighted recent comments from former Chancellor of the Exchequer Jeremy Hunt, who said he would not have been able to cut taxes this year if the Conservatives had returned to power.
The comments came in an interview with the BBC in which Hunt also accused Labour of exaggerating the situation to justify tax increases now that they have won the election.
“The reason we get so much attention on this terrible economic legacy is because Labour wants to raise taxes,” Hunt said on July 21.
“If they wanted to raise taxes, all the figures were crystal clear before the election… They had to be honest with the British public.”
Excerpts from Reeves’ speech did not mention any potential tax increases, although analysts expect such measures will not be implemented until the government unveils its budget later this year.
Instead, Reeves focused on efforts to rein in spending, saying a new office would immediately begin identifying “unnecessary spending.”
It also plans to cut unnecessary spending on consultants and sell surplus properties.
While Reeves has yet to publish details of his audit, Starmer’s office on Sunday released a standard description of what he uncovered.
The findings prompted the government to accuse the Conservatives of making large funding commitments for this financial year “without knowing where the money will come from”.
He said the military was being “hollowed out” at a time of increasing global threats and the National Health Service was “broken”, with around 7.6 million people waiting for medical care.
Despite billions spent on housing migrants and combating criminal gangs that ferry them across the English Channel in dangerous rubber boats, the number of people making the crossing continues to rise, Starmer’s office said.
Some 15,832 people have already crossed the English Channel in small boats this year, 9 percent more than in the same period in 2023.
“The assessment will show that the UK is broke and in trouble, and expose the catastrophe that populist politics has wreaked on the economy and public services,” Downing-Rudd said in a statement.
The dilemma the government finds itself in should come as no surprise, according to the Institute for Fiscal Studies, an independent think tank that focuses on economic policy in Britain.
At the start of the election campaign, the institute said the UK was in a “precarious financial position” and that the new government would have to raise taxes, cut spending or relax public borrowing rules.
“For a party to come to power and then declare things ‘worse than expected’ would be fundamentally dishonest,” the union said on May 25.
“The next government does not need to seize power in order to ‘open the books.’ These books are published transparently and are available for all to read.
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