Chancellor of the Exchequer Rachel Reeves’ speech is expected to lay the groundwork for a tax hike.
The UK’s new Chancellor of the Exchequer is accusing the previous government of covering up the dire state of the country’s finances as he prepares to deliver a speech to parliament widely expected to lay the groundwork for spending cuts and higher taxes.
In extracts from her speech released late Sunday, Rachel Reeves revealed the shocking scale of problems she found following a department-by-department review of public spending shortly after taking office three weeks ago.
Although the quotes did not include any figures, Reeves is expected to outline a 20 billion pound ($26bn) shortfall in public funding.
„It’s time to get level with the public and tell them the truth,” Reeves would say in the House of Commons.
“The previous government refused to take tough decisions. They covered up the true state of public finances. Then they ran away,” he said.
Prime Minister Keir Starmer’s left-leaning Labor 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” about the scale of the fiscal challenges facing the next government.
Labor promised during the campaign not to raise taxes on „working people”, saying its policies would deliver faster economic growth and generate much-needed extra revenue for the government.
The Conservatives, meanwhile, have promised more tax cuts if they’re back in office in the fall.
Starmer’s office highlighted recent comments by former Chancellor of the Exchequer Jeremy Hunt confirming that the Conservatives would not be able to cut taxes this year if they were returned to power, as evidence that the previous government was not being honest about the challenges facing the UK.
The comments came in an interview with the BBC in which Hunt accused Labor of exaggerating the situation to justify raising taxes now that they have won the election.
„The reason we’re so hung up on this terrible economic legacy is because Labor wants to raise taxes,” Hunt said on July 21.
„If they wanted to raise taxes, all the numbers were clear before the election … they should have leveled with the British public.”
Extracts from Reeves’ speech did not mention possible tax increases, although analysts speculate that such measures will not be introduced until the government publishes its budget later this year.
Instead, Reeves focused on efforts to control spending, saying a new office would immediately begin identifying „wasteful spending.”
He plans to freeze essential expenses for consultants and sell surplus assets.
While Reeves has yet to release details of his audit, Starmer’s office released an overview of what it uncovered on Sunday.
Those findings led the government to accuse the Conservatives of making significant funding cuts for this financial year „without knowing where the money was going to come from”.
It argued that the military was „whitewashed” and the National Health Service was „broken” at a time of growing global threats, with around 7.6 million people waiting for care.
Starmer’s office said despite billions being spent on housing migrants and fighting criminal gangs who ferry migrants across the English Channel in dangerous inflatable boats, the number of people crossing is still rising.
This year already 15,832 people have crossed the canal in small boats, which is 9 percent more than the same period in 2023.
„This assessment shows that the UK is broken and broken – revealing the mess populist politics has made of the economy and public services,” Downing Street said in a statement.
According to the Institute for Fiscal Studies, an independent think tank that focuses on Britain’s economic policies, the government finds itself in a predicament that is not surprising.
At the start of the election campaign, the agency said the UK was in a „parlous fiscal position” and that the new government would have to raise taxes, cut spending or loosen rules on public borrowing.
„It would be fundamentally dishonest for a party to walk into an office and announce that it is 'worse than expected’,” the IFS said on May 25.
The next government need not enter office to 'open the books’. Those books are openly published and available for all to study.