RACHEL Reeves will lay the ground for a brutal Autumn of tax raids in a gloom-ridden speech on Monday.
The Chancellor will warn that an estimated £20bn black hole in the public purse means “tough choices” are required on tax and spend at this year’s Autumn Budget.
Ms Reeves is set to reveal the grim findings of a fresh probe into the state of Whitehall’s wallet.
She will insist the results are worse than imagined and blame the Tories for leaving her with no choice but to unleash a raid on levies.
While a date for the Budget hasn’t yet been set, mandarins are already eyeing up a hike on inheritance and capital gains tax to boost Treasury coffers.
Sir Keir Starmer has repeatedly vowed that VAT, income tax and national insurance will not go up this parliament.
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Today a Downing Street spokesperson said: “The Chancellor is very clear that it is important to be straight with the public about the state of the finances.
“And she is committed to fiscal discipline.
“In line with that, that’s why she has commissioned this audit.”
A Labour source added: “On Monday, the British public are finally going to see the true scale of the damage the Conservatives have done to the public finances.
“They spent taxpayers’ money like no tomorrow because they knew someone else would have to pick up the bill.
“It now falls to Labour to fix the foundations of our economy and that work has already begun.”
Shadow Chancellor Jeremy Hunt yesterday slammed Labour’s claim the Conservatives trashed the economy as “nothing but a fabrication”.
He accused the government of feigning surprise at the state of the economy to avoid making difficult, cost-saving calls on public sector pay and welfare reform.
Mr Hunt said: “The books have been wide open since the Office for Budget Responsibility was set up 14 years ago.
“They show an economy that has turned the corner and a deficit one-third of that left behind by Labour – and not this nonsense the Chancellor is peddling.
“The reality is she does not want to take the difficult decisions on pay, productivity or welfare reform that would have meant we could live within our means and is laying the ground for tax rises.”
Mr Hunt added: “After Labour promised 50 times not to do this, they will find trust in the new government evaporates sooner than they expect.”
The Institute for Fiscal Studies yesterday rebuffed Labour’s claim the public purse is emptier than they could have imagined.
Economist Paul Johnson told the BBC “I don’t think it’s really very credible at all” that the state of the economy is a surprise.
He said: “In terms of the scale of the problems facing public services, lots of individuals and organisations have pointed out that public services are performing considerably worse than they were pre-Covid.”
On Friday morning Health Secretary Wes Streeting in Mr Streeting insisted Labour was “shocked” by Treasury coffers upon entering government.
He said: “What I think we have found shocking is the state of the public finances in the year that we’ve inherited and that means tough choices.
“The Chancellor will continue to show iron discipline and she will have the full support of the entire Cabinet.
“We have to be honest with people, to not duck the difficult decisions and to make sure that we make the right choices now that set Britain up for the longer-term success that we need.”
