- author, Nick Eardley
- role, Political reporter
The new Labour government has been in power for just over three weeks.
Meanwhile, ministers are reporting that they are finding that government departments are in a much worse position than they thought.
On Monday the finance minister will argue that the state’s finances are deteriorating, which will mean tough decisions.
To use Westminster jargon, she is touting announcements that may not be popular. But how much of what faces the government is actually surprising? And how much are these ministers trying to shape the political narrative?
First, I want to emphasize that we are already The national book situationThe Office for Budget Responsibility (OBR) publishes this twice a year and we last had a full breakdown in November last year.
We also knew during the election campaign that some tough decisions were coming.
Treasury officials claim there have been a series of surprises since he took office.
One is that public sector wage negotiations may end up costing much more than expected.
Sources say the previous government had budgeted for a low 2% settlement, meaning a much higher one would cost billions of pounds to fund – and a similar increase across the public sector would cost billions more.
Some of the money was for salaries to civil servants who would have worked at the ministry anyway, but sources said much of it was for operational costs that only emerged when the new government examined the books.
The Department of Health and Social Care has also warned that hospital building plans in England are running significantly over budget.
Officials said there were additional spending commitments announced after the Autumn Statement that needed to be paid for. We will hear about “in-year pressures” – extra spending that needs to be allocated immediately.
“Black Hole”
The Treasury Department is due to publish a full report and breakdown on Monday, outlining where it believes it has found the “black holes”.
At that point, we’ll be able to scrutinize the calculations and see what’s truly new.
But it was clear even before the election that whoever takes power after the election will face major challenges.
Rachel Reeves began speaking out about her messy inheritance well before Election Day.
“I know the situation is pretty bad… I don’t need to win an election to know that.”
This is not just about economics.
Ministers also cited other areas where they said the situation was worse than expected. Health Services, prisonenvironment, etc.
It’s true that overcrowding is a big challenge, something officials in the previous administration wanted to address but it wasn’t approved before the election.
But was it a surprise to the new administration?
Justice Department sources say the justice system was much closer to “catastrophe” than they had realized, leaving little time to try to solve the problem.
Even though some specific details are becoming clearer, the photo isn’t surprising at all.
Story Framework
So let’s go back to politics, because this is a lot about politics.
The new administration is trying to frame the debate for the next few years as it argues that it has left behind such a terrible legacy that it has had to do some deeply unpopular things.
They want us to blame the Conservative Party, not the Labour Party.
Former Chancellor of the Exchequer Jeremy Hunt insisted this was complete nonsense and warned that Labour was paving the way for tax rises which it did not disclose during the election campaign.
But Labour’s strategy is not new.
The Conservatives did the same thing when they came to power in 2010, arguing that the Labour government had ruined the economy and left the government underfunded, which is why austerity was essential.
This is an argument conservatives still make today.
And let’s not forget, the Labour Party in power is making the choice.
The government has promised not to increase income tax, national insurance, VAT or corporation tax.
The government has said it will not borrow further for day-to-day expenditure and is likely to opt to pay civil servants above the rate of inflation, in line with the pay agency’s recommendations.
So the government has probably discovered some startling facts that will make life a little more difficult.
But it is also trying to frame the political narrative and set the stage for what comes next.
