UK | Nation ‘broke and broken’, says new government

(London) Britain’s new Labour government said Sunday the nation was “broke and broken”, blaming its predecessors for the situation ahead of a major speech on the state of public finances that is widely expected to lay the groundwork for tax hikes.

In a sweeping assessment three weeks after taking office, Prime Minister Keir Starmer’s office said it was shocked by the situation it inherited after 14 years of Conservative rule, while publishing a department-by-department analysis of the previous government’s perceived failures.

The criticism comes a day before Chancellor of the Exchequer Rachel Reeves is due to report a £20bn ($35.5bn) deficit in the public finances in a speech to the House of Commons.

“We will not shy away from being honest with the public about the reality of what we have inherited,” Pat McFadden, a senior member of the new cabinet, said in a statement. “We are ending the false promises that the British people have had to accept and we will do what it takes to fix Britain.”

Mr Starmer’s Labour Party won a landslide election victory earlier this month following 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 promised during the campaign that it would not raise taxes on “working people”, saying its policies would help accelerate economic growth and generate the extra revenue the government needs. The Conservatives, meanwhile, have promised further tax cuts in the autumn if they are returned to power.

As evidence that the previous government was not honest about the challenges facing the country, the Prime Minister’s Office pointed to recent comments by former Chancellor of the Exchequer Jeremy Hunt, confirming that he would not have been able to cut taxes this year if the Conservatives had been returned to power.

The comments came in a BBC interview in which Mr Hunt also accused Labour of exaggerating the situation to justify raising taxes now that they had won the election.

“The reason we are hearing about this terrible economic legacy is because Labour wants to raise taxes,” Mr Hunt said on July 21. “If they wanted to raise taxes, all the numbers were clear before the election. … They should have lived up to the British public.”

Government faces a dilemma

The government on Sunday published an overview of the spending assessment commissioned by Mr.^me Reeves shortly after taking office. She will deliver the full report to Parliament on Monday.

These findings led the new government to accuse the Conservatives of having made significant financial commitments for this fiscal year “without knowing where the money would come from.”

He claimed the military had been “hollowed out” at a time of growing global threats and the National Health Service was “broken”, with some 7.6 million people waiting for treatment.

And despite billions spent on housing migrants and cracking down on criminal gangs ferrying migrants across the Channel in dangerous inflatable boats, the number of people crossing continues to rise, Mr Starmer’s office has argued. Some 15,832 people have already crossed the Channel in small boats this year, 9% more than in the same period in 2023.

“The assessment will show that Britain is broke and broken, exposing the disarray that populist politics has wrought on the economy and public services,” Downing Street wrote in a statement.

The government’s dilemma should come as no surprise, warned Paul Johnson, director of the Institute for Fiscal Studies (IFS), an independent think tank focusing on British economic policy.

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

“For a party to come into power and then declare that the situation is ‘worse than expected’ would be fundamentally dishonest,” the IFS argued on May 25. “The next government does not need to take office to ‘open the books’. These books are published transparently and are accessible to all.”