RACHEL Reeves has warned she will have to make “difficult decisions” following claims from a minister that the UK's finances are "worse than we thought".
During the General Election campaign the Institute for Fiscal Studies (IFS) hit out at the Labour Party after a then shadow minister claimed the public finances may be bleaker than expected once they "open the books".
Paul Johnson, director of the IFS, rubbished the claim and said that the finances of the UK were already "fully transparent."
Indeed, Reeves herself previously said that her party would have no excuse for changing its policies on the economy when coming into government due to the existence of the Office for Budget Responsibility (OBR).
“We’ve got the OBR now,” she told the Financial Times.
“We know things are in a pretty bad state. You don’t need to win an election to find that out”.
However, Labour MP and Leader of the House of Commons Lucy Powell told Laura Kuenssberg over the weekend that "things are even worse than we thought".
Speaking on Sunday with Laura Kuenssberg, she said: "It is I'm afraid the case that when we have opened the bonnet, when we have looked under the bonnet, things are even worse than we thought and we are going to have to take action."
Now, Reeves has issued a warning about the "scale of the challenge" the UK is facing with its finances.
In an interview with Bloomberg TV on Thursday, she said: “I’m not going to announce any tax breaks or tax changes without saying where the money is going to come from, and we will have a budget later this year.
“But I also just need to be really clear and honest about the scale of the challenge that we’ve inherited with the public finances.
“We’re going to have to make difficult decisions. We need to fix the foundations before we can start rebuilding things in Britain.
“But unlike the previous government, I am going to be honest about the scale of the challenge. I’m going to level with people.”
The Chancellor is set to announce the date of her first budget before the Commons summer recess, as well as an assessment of the “spending inheritance” left behind by the Conservatives.
The Chancellor said the party’s plans to grow the economy “depend on businesses and investors choosing Britain as a place to invest”.
She pointed to the new Budget Responsibility Bill, introduced in the Commons on Thursday, as a means of delivering the economic stability required by investors.
The law forces ministers to consult the budget watchdog, the Office for Budget Responsibility (OBR), on major tax and spending changes.
Asked whether Labour’s plans had been welcomed by investors, Reeves said:
“Absolutely. There’s no plans that I can draw up in my new office in the Treasury that are going to work unless we have business buy-in.”
Downing Street earlier said the outcome of the spending audit the Chancellor ordered Treasury officials to produce would come “shortly”.
The Prime Minister’s spokesman indicated the OBR has not been given the required 10 weeks’ notice to provide an independent forecast ahead of the next budget.
“The Treasury would announce that in the usual way,” the official said.
