Chancellor Rachel Reeves clashed furiously with her predecessor Jeremy Hunt after she accused him of “lying” over the state of the public finances before the general election.
She claimed on Monday that she had discovered a £22 billion black hole in the public finances after taking over at the helm of the Treasury.
She accused former Chancellor Mr Hunt of not being honest with the public about the crisis in the public finances before the July 4 election.
“He lied and they lied during the election campaign about the state of the public finances,” she told Sky News.
But he hit back, arguing that Labour was planning to raise taxes but had not been open with voters.
“It discredits politics when people call each other liars. I think she can do better than descend to that kind of politics,” he said.
Ms Reeves announced on Monday a series of cuts in public spending, insisting that many of the decisions were being forced on the new Government by the financial inheritance left by the previous Tory administration.
They include axing winter fuel payments for millions of pensioners, cutting back on hospital, road and rail schemes, and delaying a cap on social care bills.
She denied this was a return to austerity as she sought to make £5 billion of savings this year.
She also warned of further difficult decision ahead at the autumn Budget, on October 30, on tax, spending and welfare, to cut public spending by a further £8 billion.
But Mr Hunt argued that Labour was always planning to raise taxes but had just not told voters.
He insisted this was inevitable due to decisions by the new Government including on axing the Rwanda scheme, not doing more to reform welfare, and racking up a bill of £9.4 million in public sector pay awards.
“If we are going to have honest honourable politics, it’s a legitimate choice for a Labour government to increase spending and increase tax...that is what all Labour governments do...but they should have told us,” he said.
Ms Reeves, though, maintained that there was £6.4 billion unfunded for the asylum system, £1.6 billion for the rail network, as well as money to pay for commitments to Ukraine.
Britain’s Budget spending watchdog was unaware of the full scale of the public finances crisis until recently.
Richard Hughes, chairman of the Office for Budget Responsibility, said in a letter to the Commons Treasury committee on Monday: “The document published today by HM Treasury entitled Fixing the foundations: Public spending audit 2024-25 identifies £21.9 billion in net pressures on the DEL (Departmental Expenditure Limits) budgets set by the Treasury for the current financial year 2024-25.
“We were made aware of the extent of these pressures at a meeting with the Treasury last week.”
The Institute for Fiscal Studies previously accused the main political parties of a “conspiracy of silence” about the need after the election for higher taxes, cuts in public spending or more borrowing, but it said on Monday that the scale of the black hole was bigger than expected.
