RACHEL Reeves has vowed to “bury the Tories” over the state of the economy – but faces accusations of inventing the £22 billion blackhole.
The Chancellor told Cabinet colleagues the upcoming Budget was Labour’s best chance in thirty years to destroy their opponents.
The revelation, on the eve of Labour’s annual conference, came as Britain’s debt pile hit the same size as the economy for the first time since the 1960s AND consumer confidence fell sharply.
She told the Cabinet this week that the Budget offers Labour “the biggest opportunity since Black Wednesday to bury the Tories as they deserve”.
The comments come as the government has been plunged into turmoil over Sir Keir Starmer accepting freebies and hostile briefing of top aide Sue Gray earning more than him.
The Chancellor has already warned of “difficult decisions” on tax, welfare and spending at the Budget next month.
She faces growing criticism after cutting winter fuel allowance for all but the least wealthy pensioners.
But senior Tories last night seized on her remarks, revealed by The Times, to say the multi-billion pound figure was “ficticious” and a nakedly political move.
Ex-Treasury Minister Nigel Huddleston said: “It is clear this nothing but a desperate attempt from Labour to justify the tax rises they have planned all along, and this is just the latest evidence that Reeves has misled the public.”
But the Chancellor was dealt a fresh Budget headache yesterday as borrowing figures saw borrowing rise to £13.7 billion last month.
It marked the third highest August on record due to higher spending on public services due to running costs and pay hikes.
The increase now means that public sector debt hit 100 per cent of GDP at the end of August – levels not seen since the early 1960s.
Labour ruled out increasing income tax, national insurance and VAT ahead of the election which inhibits raising cash.
She revealed a £22 billion overspend for the current financial year following an audit of the government books when she came to office.
A government source said: “On the same day as national debt has hit 100% of GDP and the highest level since the 1960s because of the Tories’ economic failure, Tory politicians should be apologising for crashing the economy and covering up a £22 billion public hole in the public finances.”
Budget worries
Meanwhile, consumer confidence plummeted sharply last month as households “nervously” await next month’s Budget.
The survey by GfK comes as Sir Keir Starmer and Rachel Reeves have been accused of spreading doom and gloom over the state of the economy since entering office.
The monthly fall was the biggest since October last year when mortgage rates were at a high point.
Expectations for the economy over the next year fell by 12 points to minus 27 while the forecast for personal finances fell nine points to minus three.
The public’s faith has been hit with millions of concerned pensioners being stripped of their winter fuel allowance and households braced for tax rises.
There are fears that the Chancellor could target capital gains tax and inheritance tax to raise cash.
Neil Bellamy, of the GfK market research firm, said: “Strong consumer confidence matters because it underpins economic growth and is a significant driver of shoppers’ willingness to spend.
“Following the withdrawal of the winter fuel payments, and clear warnings of further difficult decisions to come on tax, spending and welfare, consumers are nervously awaiting the Budget decisions on October 30.”
A Treasury spokesperson said that the “prize” for bringing stability to the economy is “investment and well-paid jobs” making the whole of the UK better off.