Chancellor Rachel Reeves has announced the date of the Autumn Budget as she was set to tell MPs she’s discovered a £20billion black hole in the public purse since taking office
Chancellor Rachel Reeves has set the date for her first Budget.
Ms Reeves said she will have to make “difficult decisions” on tax and spending in her first fiscal statement on October 30. In a statement to Parliament, she said the public finances are in an even more dire state than they had expected and accused the Tories of a massive cover up.
Ms Reeves ordered an audit on Government spending when she entered office – and has told MPs today that she’s discovered a £22billion black hole in the public finances. She told MPs: “Before the election, I said that we would face the worst inheritance since the Second World War. Taxes at a 70-year high, debt through the roof, an economy only just coming out of recession.
“I knew all of these things. I was honest about them during the campaign.” But, she added there were things the Tories had “covered up from the country”.
She said the black hole included a £6.4billion in unfunded commitments on the asylum system and £1.6billion in the transport budget, as she said costs were “covered up” by the previous government. Other crises she said need addressing include the scale of overcrowding in prisons.
Ms Reeves’s emphasis on the dire state of public finances is interpreted as a possible tactic to lay the ground for tax rises. During the election campaign Labour insisted no new tax rises would be sprung on “working people”, with changes to income tax, VAT, and national insurance ruled out. But experts say measures could include adjustments to capital gains or inheritance taxes.
The new Chancellor needs to find money to pay for public sector pay rises, as well as find funding for struggling public services, from the NHS to prisons. She also has compensation bills for victims of the infected blood scandal and subpostmasters wrongly accused of swindling cash. Economists have warned she’ll need to make big cuts to public spending if she doesn’t find cash elsewhere.
On Sunday, Cabinet minister Steve Reed claimed Rishi Sunak “deliberately covered up” the state of the economy in the build-up to the General Election. The Environment Secretary accused the former Tory Government of “politics of denial and cover up”, saying former ministers hid how bad things were.
Mr Reed told Sky News’ Sunday Morning with Trevor Phillips: “The inheritance from the previous Government has been catastrophic, they were spending money like there’s no tomorrow, they called an election, they’ve run away and they’re trying to deny it.” He said he and colleagues had been stunned by some of the things they’d uncovered – highlighting the crisis in Britain’s prison and the cost of the Rwanda deportation project.
