The Treasury is expected to release the results of an audit that reveals a staggering £20bn deficit in public spending, sources have revealed. Chancellor Rachel Reeves is scheduled to deliver a speech on Monday in which she is expected to disclose the current state of the public finances and potentially lay the groundwork for tax increases in the upcoming autumn budget.
According to a Labour insider, the British public will finally have a clear understanding of the extent of damage inflicted upon the public finances by the Conservative party. “The previous administration spent taxpayers’ money recklessly, knowing that someone else would have to bear the consequences,” the source stated. “Now, it falls upon Labour to rectify the foundations of our economy, and we have already begun this work.”
During the election campaign, Labour had pledged not to raise income tax, VAT, or National Insurance. This means that Chancellor Reeves may have to explore other options such as capital gains tax, pension tax relief, and inheritance tax in order to increase revenue. Additionally, she may consider altering fiscal rules or restructuring the repayment of debt from quantitative easing.
When questioned about the expected £20bn deficit at a meeting of G20 finance ministers in Brazil, Chancellor Reeves replied, “I will be delivering a statement to parliament on Monday. However, I have always been transparent about the magnitude of the challenges we face as a new government. Let me be clear: we will rectify the mess that has been left for us to inherit.”
Labour is facing an additional challenge as independent pay review bodies have reportedly recommended a 5.5% pay raise for millions of public sector employees. If implemented, this could cost the government up to £10bn. Speaking to Sky News, Health Secretary Wes Streeting acknowledged that tough decisions must be made in order to address the “fictional” financial situation inherited from the previous administration. He also expressed his full support for the chancellor’s efforts to fix the public finances and revealed several instances of “unrealistic timelines” and “unfunded” commitments within his own department.
When pressed about the potential £20bn deficit, Mr. Streeting responded, “That is for the chancellor to announce. What has shocked us is the current state of the public finances.” He also criticized the Conservatives, stating, “They should be ashamed of their actions.”
When asked if the previous government had been dishonest about the state of the public finances, Tory leadership contender Mel Stride, who also serves as Shadow Work and Pensions Secretary, refuted the claim. “Let’s be clear about what’s happening here,” he stated in an interview with Sky News. “Wes Streeting may be referring to Labour’s promises on taxation during the election, which they are now backtracking on. They knew the state of the economy before the election and are now trying to justify their decision to raise taxes in the upcoming budget.”
A spokesperson from the Treasury said, “The chancellor has requested an assessment of the government’s spending situation, which will be presented to parliament before the summer recess.”
