Labour’s claim of being surprised by a substantial black hole in public finances is not credible, according to the head of an influential think tank.
Rachel Reeves is preparing to reveal a £19bn shortfall in the public finances, setting the stage for an autumn tax increase.
An initial assessment by Treasury officials has identified approximately £19bn in “excess pressures” for the 2024-25 financial year, according to Whitehall sources.
Paul Johnson, director of the Institute for Fiscal Studies, stated that the Chancellor should not feel “any sense of surprise” about the poor state of public finances.
When asked whether it is credible to say the financial shortfall was unexpected, he told BBC Radio 4’s Today programme: “I don’t think it’s really very credible at all.
“In terms of the scale of the problems facing public services, many individuals and organisations have pointed out that public services are performing considerably worse than they were pre-Covid.
“They are performing worse than they were back in 2010. We have seen Birmingham and other local authorities going bust, and we are aware of the NHS waiting lists.
“We have always known that public sector pay lags significantly behind private sector pay, considering recent trends, so there shouldn’t be any sense of surprise that there is a significant issue here.
“The choice is, as ever, whether you want public services to maintain their current level, improve, or are willing to see them decline.”
