Britain's Labour finance minister Rachel Reeves declared Monday that public finances faced an extra hole of GBP22 billion inherited from the Conservatives, who warned she was readying tax hikes.
"We have inherited a projected overspend of GBP22 billion ($28 billion) of spending... this year that was covered up by the party opposite," said Reeves, appointed after centre-left Labour won a landslide election victory to oust the Conservatives on July 4.
"If left unaddressed, it would mean a 25-percent increase in the budget deficit this year," she told lawmakers citing a detailed audit, adding her first budget will be on October 30.
"So I will today set out the necessary and urgent work that I have already done to reduce that pressure on the public finances by GBP5.5 billion this year and over GBP8.0 billion next year."
Reeves said the scale of the overspend was "not sustainable" and not to act was "simply not an option" for the newly-elected government headed by Prime Minister Keir Starmer.
The previous Conservative administration, led by Rishi Sunak, had "ducked the difficult decisions (and) put party before country", added the finance chief.
"They continued to make unfunded commitment after unfunded commitment, knowing that the money was not there, resulting in the position that we have now inherited."
Reeves, who is the first female chancellor of the exchequer, also said her newly-elected Labour government will unveil its first spending and taxation statement on October 30.
"It will be a budget to fix the foundations of our economy," she told lawmakers, adding she was also launching a multi-year spending review to set departmental budgets for three years.
The main opposition Conservatives however rejected Labour's claims, alleging the new government is using the fiscal assessment to lay the ground for tax hikes.
"She will fool absolutely no one with a shameless attempt to lay the ground for tax rises she didn't have the courage to tell us about," said Conservative finance spokesperson Jeremy Hunt, who had been UK finance minister prior to the general election.
The audit is widely seen as preceding infrastructure spending cuts and potential rises to some taxes -- although Labour vowed during the election campaign that it would not raise the main rates levied on workers.
Prior to Monday's statement, The Sunday Times newspaper and other media had already reported that Reeves' team had identified an additional public finances black hole of around GBP20 billion.
The UK deficit -- the difference between what the government receives in tax and what it spends -- stood at around GBP120 billion in the 12 months to the end of March, the country's last fiscal year.
