The last Conservative government “deliberately covered up” the true state of public finances, a cabinet minister has said, as the chancellor prepares to detail a “£20bn black hole” in the public finances.
The environment secretary, Steve Reed, said his cabinet colleagues “always knew” the inheritance from the Tories was “going to be bad”, but that since coming to office they had found “additional pressures” that had not been disclosed.
Reed cited as examples the prison overcrowding crisis, and the amount spent on the Rwanda asylum scheme, revealed by the home secretary, Yvette Cooper, to be £700m.
Speaking on BBC One’s Sunday with Laura Kuenssberg programme, Reed said: “We’ve got into our offices now and we’ve seen what’s really been going on, and it’s catastrophic. It’s worse [than expected]. There were things that we could not have known during the election, because the Conservatives had not only not released the information, but in some cases, they deliberately covered it up.”
He questioned whether Tory MPs were “involved in this cover-up” or whether they did not know, and as a result “should be grateful that Rachel Reeves is now exposing the true extent of this catastrophic inheritance from the previous Conservative government”.
Reeves is due to set out the findings of a Treasury audit on Monday and will also announce the date of the spending review and the budget in October.
Experts expect she will be forced to announce tax changes in the budget, with options including new capital gains or inheritance taxes and slashing other tax reliefs. The chancellor has ruled out changes to income tax, VAT, national insurance and corporation tax – the largest revenue raisers.
Reeves is also expected to announce a delay to a host of infrastructure projects to fill the black hole in the public finances, including new roads and rail lines promised by the last government and plans to build 40 new hospitals, announced by Boris Johnson.
The shadow paymaster general defended the Conservatives’ handling of public services while in government and accused Labour of “breaking all their promises” from their general election campaign.
Asked on Sky News’ Sunday Morning with Trevor Phillips if he was embarrassed by the “black hole” in public finances, John Glen said: “I’m not embarrassed at all. Government is about taking tough choices across a balanced set of priorities. What we were trying to do was prioritise working people’s tax cuts as much as we possibly could whilst maintaining investment in the NHS, long-term workforce reform plans in the NHS, the first time in its history, and continue to invest in education and public services.
“What we also said in the election campaign is that we had a very rigorous campaign to actually get more efficiencies in our public services welfare reform, getting the number of civil servants reduced, because it’s a historic high, and actually bring reformed public services, and that is the area that this government appears to have very, very little narrative on.
“What they’re just saying is, ‘tell us the maximum amount you want to spend and we’ll raise the taxes for you’, something they explicitly ruled out 50 times during the election campaign.”
The head of the Cabinet Office, Pat McFadden, said he was shocked upon learning the “full picture” of the state of public services after cabinet ministers sent him an analysis of their departments and budgets shortly after the election.
In an op-ed for the Sunday Telegraph, he said: “The public estate is crumbling, with some children being taught in schools that need urgent repairs. Our bulging prisons are in crisis – something the previous government knew about but from which they ran away. Costs in the immigration system have soared, with £700m spent on the Rwanda scheme to send just four volunteers to that country.
“Unlike the opposition, we will be straight with the British public. We were elected to deliver real change to our country, but we cannot do that overnight.”
