- Reeves to reveal £20bn “black hole”
- Promises to “fix inherited mess”
- Government blames Conservatives’ financial mismanagement
An assessment of public spending pressures will reveal accusations of a “black hole” worth tens of billions of pounds by the new administration.
Chancellor Rachel Reeves said she will make a presentation to Parliament on Monday that is “honest” about the nature of the problem before the new Labour government.
She promised to “fix the mess we inherited,” but refused to confirm reports that the “black hole” amounted to more than £20 billion per year.
The incoming government will argue that its predecessor failed to fund a variety of critical public services, ranging from public transportation to prisons.
A Labour insider claimed that on Monday, the British public will finally witness the full extent of the Conservatives’ devastation to the public finances.
They squandered taxpayer money like there was no tomorrow because they knew someone else would have to pay the bill. Labor is now responsible for repairing the foundations of our economy, and that job has already begun.
On Monday, Ms. Reeves will also put out the government’s reaction to the public sector wage recommendations, which are approximately 3% higher than current spending forecasts.
Independent pay committees have warned about recruitment and retention issues and calculated that the public wants to end months of rolling strikes, prompting the chancellor to approve some above-inflation pay settlements for public sector workers.
Cabinet ministers have spent the week claiming that a comprehensive review of their departmental records has discovered more “severe” issues than originally anticipated.
The opposition claims that this is a concerted effort to prepare the public for tax increases in the autumn budget.
The “black hole” emerges because the government claims it needs to spend more money to keep public services running.
Governments, on the other hand, set their own rules for borrowing money to pay for public services such as the NHS and managing the country’s debt.
Paul Johnson, director of the Institute for Fiscal Studies think tank, said it was not credible that the government had now looked at the books and discovered problems that were more severe than expected, given that many organizations have pointed out that “most public services are now performing significantly worse than they were pre-Covid.”
As always, the question is whether you want public services to be as good or better than they are, or if you are pleased to see them deteriorate.
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The “black hole” refers to the additional funds required by the government to satisfy its self-imposed debt targets in the future.
It’s possible that former chancellor Jeremy Hunt suggested saving these funds instead.
Mr. Hunt admitted that he would not have been able to pay immediate tax cuts if the Conservatives had won the election.
Some economists said many of these spending demands and the possibility of raising taxes to support them were obvious and should have been addressed during the election.
There will be no tax policy pronouncements on Monday; the audit implies that the Treasury will spend the summer looking for more savings or tax income to plug this “black hole.”.
A more upbeat economic picture from the independent forecaster Office for Budget Responsibility might also help to improve certain difficult trade-offs.
