Labour government has inherited “the worst set of circumstances since the second world war


Rachel Reeves has warned that Britain’s new Labour government has inherited “the worst set of circumstances since the second world war”, as she instructed the Treasury to examine previous spending under the Conservatives.

In her first major speech in the role, the UK chancellor prepared the ground for tough choices on the public finances this year as she vowed to prioritise growth and unblock housing developments and onshore wind farms.

“We face a legacy of 14 years of chaos and economic irresponsibility,” Reeves said on Monday. “That is why over the weekend I instructed Treasury officials to provide an assessment of the state of our spending inheritance so that I can understand the full scale of the challenge.”

The Treasury analysis of the fiscal inheritance from Rishi Sunak’s government will be published before parliament’s summer recess this month.

In an apparent reference to spending controls or tax rises, Reeves said the review would pave the way for “difficult choices” in an autumn Budget, the date of which will also be announced before MPs head off for their summer break.

Reeves said that what she had “seen in the past 72 hours” had “only confirmed” her previous warnings “that whoever won the general election would inherit the worst set of circumstances since the second world war”.

The Conservatives, who argued during the election campaign that Labour in government would spring surprise tax rises on the public, claimed that the review would help Reeves justify tax rises in her autumn Budget.

One former Tory minister said all details of public spending were in the public domain already, either in Office for Budget Responsibility forecasts or in published spending estimates that are approved by parliament.

“It’s a pretext,” the ex-minister said. “This is exactly what we said they would do when we said they would up taxes.”

A person close to Reeves said the exercise would allow the chancellor to update parliament “on the state of play” in the economy, adding that it was “not a Budget or comprehensive spending review or anything like that”.

Reeves, who was appointed by Sir Keir Starmer following Labour’s landslide election win last week, declared that the UK now had a “stable government” that would work with business. She pledged to make the country a “safe haven” for investment.

Reeves said her bid to boost growth would involve reforming the UK’s sclerotic planning system, adding that her party had been “elected on a mandate to get things done and to get Britain building again”.

She reiterated Labour’s target to build 1.5mn new homes over the next five years, teeing up measures including reform of the National Planning Policy Framework by the end of the month.

She also said that mandatory housing targets would be restored and that the de facto ban on onshore wind farms in England had been ended.

Reeves added that she would attempt to unblock “stalled sites” of large housing schemes stuck in mid-development, saying the government had already decided to intervene on two planning appeals for data centres.

The government will also review the boundaries of the green belts that encircle big cities, as it seeks to permit more building on areas that are protected despite being of poor quality.

Reeves pledged to be decisive on planning, saying: “We will not succumb to a status quo that responds to the existence of trade-offs by always saying no.”