Cabinet Secretary backs Labour in ‘Tory £22bn black hole’ row

Simon Case rebukes Conservatives for suggesting Labour exaggerated state of public finances

Britain’s top civil servant has rebuked the Conservatives for suggesting Labour exaggerated the scale of the black hole in the public finances when Sir Keir Starmer took office.

Cabinet secretary Simon Case said Rishi Sunak and Jeremy Hunt’s failure to hold a spending review in its last year in office added to the uncertainty facing the Treasury.

It came after Mr Hunt, who served as chancellor until the general election, wrote to Mr Case in July to criticise what he described as “deeply troubling” statements by Rachel Reeves about the state of the public purse.

Cabinet Secretary Simon Case rebuked the former chancellor (PA Wire)

He said her claims about there being a £22bn financial black hole contradicted formal government spending plans signed off just days earlier.

In a response leaked to the BBC, Mr Case said the discrepancy could be explained by the rushed parliamentary timetable in the run up to the general election.

And he went further, questioning the previous government’s decision not to update departments’ budgets since 2021.

In the letter, seen by the BBC, he said: “I would also note that the sizeable in-year changes to spending plans in recent years have resulted from the lack of a new Spending Review to replan departmental budgets in the face of significant pressures which have materialised since budgets were set in 2021.

“By the time the election was called, we were in the final year of the 2021 Spending Review period. The most effective way to transparently identify, quantify and address those pressures would have been to conduct a prompt Spending Review.”

Jeremy Hunt said the £22bn claim was cover for Rachel Reeves to put up taxes (UK Parliament)

He also contrasted Sir Keir and Ms Reeves’ approach, saying that “unlike previous years” they have “set out to Parliament the pressures that it is having to manage down and the actions it is taking to do so”.

Mr Case’s letter will be a setback for Mr Hunt, who had hoped to cast doubt on Ms Reeves’ concern over the state of Labour’s economic inheritance.

The shadow chancellor has previously described her warnings about the £22bn black hole as a bid to lay the groundwork for tax rises “she didn’t have the courage to tell us about” during the election campaign.

Rachel Reeves is expected to use her first budget to announce tax hikes and spending cuts

“She wants to blame the last Conservative government for tax rises and project cancellations she’s been planning all along,” he said after Ms Reeves revealed the spending gap.

One measure Ms Reeves announced in a bid to fill the black hole was the ending of universal winter fuel payments, which are worth up to £300 for pensioners. The measure will now be means tested, meaning 10m will miss out.

In her first Budget in October, Ms Reeves is widely expected to announce further painful spending cuts and tax rises to plug the gap.

Amid a rebellion over the government’s decision on winter fuel payments, the prime minister on Monday urged his MPs to prepare for further “tough choices” to bring public finances back under control.