Britain's new chancellor of the exchequer is accusing the previous government of covering up the dire state of the country's finances as she prepares to deliver a speech to Parliament that is expected to lay the groundwork for spending cuts and higher taxes.
In extracts of her speech released on Sunday night, Rachel Reeves expressed shock at the scale of the problems she uncovered following a department-by-department review of public spending commissioned shortly after she took office three weeks ago.
Although the excerpts do not include figures, Reeves is expected to outline a 20 billion pound ($26 billion) shortfall in public finances.
“It's 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 ran away.”
Prime Minister Keir Starmer's left-leaning Labour Party won a landslide election victory earlier this month, ending 14 years of Conservative rule.
During the campaign, critics accused both parties of a “conspiracy of silence” over the scale of the financial challenges facing the next government.
The Labour Party promised during the campaign that it would not raise taxes on “working people”, claiming that its policies would generate faster economic growth and the additional revenue the government needs.
Meanwhile, the Conservatives have promised further tax cuts in the autumn 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 by former Treasury chief Jeremy Hunt, who confirmed that 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’re getting so much attention about this terrible economic legacy is because Labour wants to raise taxes,” Hunt said on July 21.
“If they wanted to raise taxes, all the numbers were crystal clear before the election… They should have been honest with the British public.”
Excerpts from Reeves' speech made no mention of possible tax increases, although analysts speculate such measures will not be introduced 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 halt non-essential spending on consultants and sell off surplus property.
While Reeves has yet to publish details of his audit, Starmer's office published an overview of what it revealed on Sunday.
These findings led the government to accuse the Conservatives of making significant funding commitments for this financial year “without knowing where the money would come from”.
He said the military had been “hollowed out” at a time of growing global threats and the National Health Service was “broken”, with some 7.6 million people waiting for medical care.
And despite billions spent on housing migrants and tackling the criminal gangs transporting them across the English Channel in dangerous inflatable 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 review will show that the UK is bankrupt and in trouble, revealing the disaster that populist politics has wrought on the economy and public services,” Downing Street said in a statement.
The dilemma facing the government should come as no surprise, according to the Institute for Fiscal Studies, an independent think tank focused on Britain's economic policies.
At the start of the election campaign, the institute said the UK was in a “precarious fiscal position” and that the new government would have to raise taxes, cut spending or relax rules on public borrowing.
“For a party to come to power and then declare that things are ‘worse than expected’ would be fundamentally dishonest,” the IFS said on May 25.
“The next government does not need to assume power to ‘open the books.’ These books are published transparently and available for everyone to inspect.”
