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RACHEL Reeves will unveil the scale of “broke and broken” Britain as she paves the way for tax hikes.
The Chancellor will issue a stark warning that the Government must make difficult decisions to clean up the “mess” left by the Tories.
Ms Reeves is set to reveal grim findings of a Treasury deep-dive into the public finances in a gloomy speech to MPs tomorrow.
She will use what is being nicknamed the “blame document” to outline a £20billion black hole.
And she’ll claim the Tories made funding commitments without knowing where the money would come from.
This will likely pave the way for delays to projects such as the Tory pledge for 40 new hospitals and proposed road plans such as the Lower Thames Crossing.
It comes as she is tipped to approve above-inflation pay rises for millions of public sector workers, which may cost as much as £10billion.
Pat McFadden, Chancellor of the Duchy of Lancaster, said: “After 14 years of Conservative failure, the Labour Party is calling time on the sticking plaster politics of populism.
“We will not shy away from being honest with the public about the reality of what we have inherited.”
PM Sir Keir Starmer has repeatedly said VAT, income tax and National Insurance will not go up.
It leaves the door open to changes to pensions relief, capital gains and inheritance levies.
Ministers have spent their first few weeks laying bare the state of public services and blaming the Tories in a Whitehall exercise known as “Bring out your dead”.
But critics accuse the Chancellor of exaggerating the picture to prepare for tax hikes in the Autumn Budget.
Shadow Chancellor Jeremy Hunt said Labour was peddling “fiction”.
He said the books have been “wide open” since the OBR was established in 2010 to provide independent analysis of the UK’s finances.
He added: “Having promised not to raise taxes 50 times before the election they now need a pretext, but trying to scam the British people so soon after being elected is a high risk strategy doomed to fail.”
Laura Trott, shadow Chief Secretary to the Treasury, warned Labour the Tories will fight with “full force” an attempt to hike fuel duty.
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