UK Politics Live: Reeves blames Tories for £20bn black hole as Rayner overhauls planning rules

The shadow treasurer defended the Tories’ handling of public services while in government and accused Labour of “breaking every promise” during its general election campaign.

Asked on Sunday Morning with Trevor Phillips whether he was bothered by the “black hole” that now exists in the public finances, John Glen said: “I’m not bothered at all. Government is about making tough choices within a balanced set of priorities.”

“What we were trying to do was prioritise tax cuts for working people as much as possible while maintaining investment in the NHS, long-term workforce reform plans in the NHS for the first time in its history, and continuing to invest in education and public services.

“What we also said during the election campaign is that we have campaigned very rigorously to get more efficiency in our reform of public services, reducing the number of civil servants, because this is a historic level, and really reforming public services, and that is the area where this government seems to have very, very little discourse.

“What they are saying is: ‘tell us the maximum amount you want to spend and we will raise taxes for you,’ something they explicitly ruled out 50 times during the election campaign.”

Steve Reed has reiterated Labour’s pledge not to raise taxes on working people, ahead of a speech by Rachel Reeves which is expected to reveal a £20bn hole in the public finances.

As Labour is expected to announce tax rises to plug the deficit, the environment secretary has said the party will not increase VAT, income tax or national insurance.

He did not rule out further tax hikes, however, which could include an overhaul of the inheritance tax and equalizing the capital gains tax and income tax.

Repeating Labour’s pledge not to raise taxes on workers, he told the BBC: “The reason we want to do this is because after 14 years of Tories, we have the highest level of personal taxation on workers for 70 years, we are in a cost of living crisis.

“This government will not seek to increase taxes on workers.”

Labour’s legacy has been “catastrophic”, the environment secretary has said.

Steve Reed said that when he took office, ministers saw “what is really happening” and that it was worse than expected.

He pointed to a hole in public finances before a speech by Rachel Reeves laid bare the extent of the crisis.

Mr Reed told the BBC: “There were things we couldn’t have known during the election because the Conservatives not only failed to disclose information but in some cases they deliberately concealed it.”

The Bank of England’s next interest rate decision is on a knife-edge, experts said, as borrowers wait to see whether costs will be cut for the first time since the pandemic.

Economists are divided over whether Bank officials will decide it is an opportune time to cut rates on Thursday.

The UK’s base rate has been held at 5.25% since August last year, as part of the central bank’s mission to rein in runaway inflation.

But with inflation hitting the Bank’s 2% target level in the past two months, hopes have been raised that rates could be cut, easing pressure on borrowers.

If so, it would be the first time UK rates have been cut since the start of the Covid-19 pandemic in March 2020.

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The Chancellor is expected to approve above-inflation pay rises for millions of public sector workers in response to recommendations from independent pay review bodies.

Teachers and some 1.3 million NHS staff could get a 5.5% pay rise, which could cost around £3.5bn more than budgeted.

This could rise to around £10bn if other pay review bodies gave similar advice on staff such as police officers, prison officers, doctors and dentists, according to the Institute for Fiscal Studies (IFS).

Since this cost has not been fully budgeted for in current plans, funds would have to be raised through existing fiscal space, by changing budget rules or by increasing taxes.

No tax increases to meet these costs are expected until the autumn budget, which Ms Reeves is also expected to announce on Monday.

Labour has ruled out raising income tax, VAT, national insurance contributions and corporation tax, potentially leaving changes to pension relief and capital gains and inheritance taxes on the table.

Angela Rayner’s planning announcement comes as Chancellor Rachel Reeves is expected to unveil a black hole in the public finances worth around £20bn.

The Chancellor will outline the Conservatives’ fiscal legacy when she presents the results of a Treasury audit to Parliament on Monday.

A government spokesman said the audit showed that “the previous government made significant funding commitments for this financial year without knowing where the money would come from”.

The spokesman added: “The assessment will show that Britain is ruined and broken – exposing the mess that populist politics has created in the economy and public services.”

Angela Rayner will unveil a sweeping overhaul of planning rules next week as Labour seeks to pave the way for 1.5 million homes to be built in five years.

The Deputy Prime Minister and Secretary of State for Housing said that “delivering social and affordable housing at scale” was her “number one priority”.

But the planning system should be “a launching pad” rather than a “ball and chain” holding back the housing market, she wrote in The Observer.

The overhaul, which will be announced before MPs leave for the summer recess, will include reinstating mandatory housing targets that were scrapped by the previous government and introducing “golden rules” to ensure development works for local people and protects nature, Ms Rayner said.

“We plan to set out these early and important changes in more detail in an updated National Planning Policy Framework next week,” Ms Rayner wrote.

Dame Priti Patel has said she will run for Conservative Party leader, making her the fifth Conservative MP to stand.

She joins Mel Stride, Tom Tugendhat, James Cleverly and Robert Jenrick in the race to replace Rishi Sunak as Conservative Party leader.

She wrote on Twitter: “I am running to be the new leader of the Conservative Party. We must unite to win!

“I can lead us in opposition, unify our party and prepare us for the next elections, with unity, experience and strength.”

She said she could provide the “experienced and strong” leadership needed to unite the Tories’ disparate factions, in an article for the Telegraph on Saturday.