Former leader of the Scottish Conservatives, Ruth Davidson, has criticized Labour Chancellor Rachel Reeves for claiming she was unaware of the full state of the public finances until taking office. Speaking on the Electoral Dysfunction podcast hosted by Beth Rigby, Davidson accused Reeves of creating a political narrative to justify her economic plans.
Reeves is expected to announce tax increases and spending cuts in her first budget this October, citing the previous Conservative government’s alleged attempt to conceal the true state of the nation’s finances and leaving behind a £22bn spending gap. However, Davidson refutes this claim, stating that it is “completely, laughably wrong” to suggest that Reeves was unaware of the finances.
Davidson explains that one does not fully understand the financial figures until they are deeply involved in the departmental details, which can only be accessed while in government. She also dismisses the idea that Reeves added certain expenses to the total to create the £22bn “black hole,” stating that during the election campaign, questions were constantly raised about the ability to fund proposed policies.
Reeves had consistently maintained during the election that if Labour were to win, they would inherit the worst economic legacy since the Second World War and would need to exercise “iron discipline” to balance the books. However, since taking office, Reeves has stated that the situation is even worse than she expected, and accused the Tories of making spending promises without allocating the necessary funds.
Former Chancellor Jeremy Hunt has refuted these claims, accusing Reeves of using the £22bn “black hole” as an excuse to implement tax hikes and spending cuts that she had planned all along. Labour’s manifesto had ruled out major tax increases, such as National Insurance, VAT, and Income Tax. Still, reports suggest that Reeves may increase Inheritance Tax or Capital Gains Tax in what is anticipated to be a “grim” October budget.
The Institute for Fiscal Studies (IFS) has also weighed in on the issue, stating that Reeves’ claims are disingenuous, but also acknowledging that the previous Conservative government left behind many challenges for the new government to address. IFS Director Paul Johnson stated that the Tories were not entirely honest about the challenges ahead, but ultimately concluded that Reeves cannot use the alleged “black hole” to justify tax increases without acknowledging that these were necessary prior to the election.
