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UK is ‘broke and broke’, new government says as it prepares to tackle public finance deficit
Britain’s new left-wing government says the nation is “broke and destroyed”, 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 higher taxes
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DANICA KIRKA Associated Press
July 28, 2024, 6:52 AM ET
• 4 min read
LONDON — Britain’s new left-wing government said on Sunday the nation was “broke and destroyed”, 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 higher taxes.
In a sweeping assessment three weeks after taking office, Prime Minister Keir Starmer’s office expressed shock at the situation it inherited after 14 years of Conservative rule, while also releasing a department-by-department analysis of the previous government’s perceived failings.
The criticism comes a day before Treasury chief Rachel Reeves highlights a £20 billion ($26 billion) deficit in the public finances during 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 calling time on the false promises the British people have had to put up with and we will do whatever it takes 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” over the scale of the financial challenges the next government will face.
Labour pledged during the campaign not to raise taxes on “hardworking people,” saying its policies would deliver faster economic growth and generate needed additional revenue for the government. The Conservatives, meanwhile, have promised more tax cuts in the fall if they are re-elected.
As evidence that the previous government was not honest about the challenges facing the country, Starmer’s office highlighted recent comments by former Treasury chief Jeremy Hunt confirming that he would not have been able to cut taxes this year if the Conservatives had returned to power.
The comments were made in an interview with the BBC in which Hunt also accused the Labour Party of exaggerating the situation to justify raising taxes now that they have won the election.
“The reason we are getting all this hype about this terrible economic legacy is because Labour wants to raise taxes,” Hunt said on July 21. “If they wanted to raise taxes, all the numbers were clear before the election. … They should have levelled with the British public.”
The government on Sunday released an overview of the spending review that Reeves commissioned shortly after taking office. She will deliver the full report to Parliament on Monday.
These findings prompted the new government to accuse the Conservatives of making significant financial commitments for this fiscal year “without knowing where the money would come from.”
He argued the military was “depleted” at a time of rising global threats and the National Health Service was “broken”, with around 7.6 million people waiting for care.
And despite billions spent on sheltering migrants and cracking down on criminal gangs ferrying migrants 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 so far this year, 9% more than in the same period in 2023.
“The review will show that Britain is broke and bankrupt – revealing the mess that populist politics has made of the economy and public services,” Downing Street said in a statement.
The dilemma the government finds itself in should come as no surprise, said Paul Johnson, director of the Institute for Fiscal Studies, an independent think tank focused on Britain’s economic policies.
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 raise taxes, cut spending or relax rules on public borrowing.
“For a party to come into power and then declare that things are ‘worse than expected’ would be fundamentally dishonest,” the IFS said on May 25. “The next government does not need to come into power to ‘open the books.’ Those books are published transparently and are available for all to inspect.”