The new government says the UK is ‘broke and broke’ as it prepares to tackle the public finance deficit

LONDON – Britain’s new left-leaning government said on Sunday the country was “broke and broke”, blaming previous governments ahead of a key speech on the state of the public finances that is widely expected to lay the groundwork for tax increases.

In a sweeping assessment three weeks after taking office, Prime Minister Keir Starmer’s office expressed shock at the state of affairs he inherited after 14 years of Conservative rule, while issuing a department-by-department analysis of the previous government’s perceived failings.

The criticism comes a day before Chancellor of the Exchequer Rachel Reeves is expected to set out the public finances’ deficit at £20 billion ($26 billion) in a speech to the House of Commons.

“We will not hesitate to be honest with the public about the truth of what we have inherited,” Pat McFadden, a senior member of the new government, said in a statement. “We demand an end to the broken promises that the British people have had to endure, and we will do everything we can to fix Britain.”

Starmer’s Labour Party won a landslide election victory earlier this month after a campaign in which critics accused both main parties of a “conspiracy of silence” about the scale of the financial challenges facing the next government.

Labour campaigned on a promise not to raise taxes on “workers”, saying its policies would lead to faster economic growth and generate much-needed extra revenue for the government. 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 country, Starmer’s office pointed to recent comments by former Chancellor of the Exchequer Jeremy Hunt, who said 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.

On July 21, Hunt said: “The reason for all the fuss about this terrible economic legacy is that Labour wants to raise taxes. If they want to raise taxes, all the figures were clear before the election… They should have been honest with the British public.”

The government on Sunday released an overview of the spending assessment commissioned by Reeves shortly after taking office. The full report will be presented to Parliament on Monday.

The findings prompted the new government to accuse the Conservatives of making large funding commitments for the current financial year “without knowing where the money would come from”.

She claimed the military had become “hollowed out” at a time of increasing global threats, and that the National Health Service was “collapsing”, with some 7.6 million people waiting for healthcare.

Despite billions of pounds spent on housing migrants and combating criminal gangs that ferry people across the English Channel in dangerous inflatable boats, the number of people making the crossing is still rising, Starmer’s office said. Some 15,832 people have crossed the Channel in small boats already this year, up 9% on the same period in 2023.

“The assessment will show that Britain is broke and broken – and will expose the havoc that populist politics has wreaked on the economy and public services,” Downing Street said in a statement.

Paul Johnson, director of the Institute for Fiscal Studies, an independent think tank that focuses on British economic policy, said the predicament the government finds itself in should come as no surprise.

At the start of the election campaign, the institute said the UK was in a “critical fiscal position” and that the new government would either have to raise taxes, cut spending or relax rules on public borrowing.

On May 25, the Institute for Fiscal Studies said: “For a party to come to power and then declare that things are ‘worse than expected’ is deeply dishonest. The next government does not need to come to power to ‘open the books’. These books are published transparently and are available for all to see.”