Chancellor Rachel Reeves to unveil £20bn black hole in public finances
ITV News Political Reporter Jasmine Cameron-Chileshe explains what announcements the chancellor will make in her speech
Chancellor Rachel Reeves will outline the state of the UK's public finances on Monday when she delivers a speech to the Commons.
Ms Reeves will set out the results of the spending audit she ordered Treasury officials to produce.
She is expected to unveil a black hole in the public finances of around £20 billion - which experts have suggested could signal future tax rises.
Ms Reeves will also respond to the recommendations of independent pay review bodies, where she is likely to approve above-inflation pay rises for millions of public sector workers.
Any tax hikes to plug the shortfall in spending for essential public services are not expected before the autumn budget, the date of which Ms Reeves is also set to announce on Monday.
Labour has ruled out lifting income tax, VAT, national insurance and corporation tax, but changes to capital gains or inheritance levies may be on the table.
As she presents the findings of the audit, Ms Reeves is expected to confirm the plans of her Tory predecessor Jeremy Hunt would require significant cuts to already cash-strapped public services.
The chancellor is widely expected to be forced to raise taxes in the budget to avoid the spending squeeze implied by the existing plans and to meet her fiscal rule to have debt falling as a share of gross domestic product (GDP) in five years' time.
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Ms Reeves is expected to say: "Before the election, I said we would face the worst inheritance since the Second World War.
"Taxes at a seventy year high. Debt through the roof. An economy only just coming out of recession. I knew all those things. I was honest about them during the election campaign. And the difficult choices it meant.
"But upon my arrival at the Treasury three weeks ago, it became clear that there were things I did not know. Things that the party opposite covered up from the country."
She will add: "It is time to level with the public and tell them the truth.
"The previous government refused to take the difficult decisions. They covered up the true state of the public finances. And then they ran away. I will never do that.
"The British people voted for change and we will deliver that change. I will restore economic stability. I will never stand by and let this happen again."
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Teachers and some 1.3 million NHS staff could be in line for a 5.5% pay boost, if, as expected, Ms Reeves approves above-inflation pay rises for millions of public sector workers.
Economists believe the cost of this decision could rise to around £10 billion more than budgeted, if other pay review bodies give similar advice on workforces, such as police and prisons officers and doctors and dentists.
Prime Minister Sir Keir Starmer has previously acknowledged there would be a cost if failing to follow the recommendations of the pay review bodies led to a fresh wave of industrial disputes in the public services.
Elsewhere, the chancellor is expected to commit the government to one major fiscal event per year, bringing an end to so-called "surprise budgets".
She will also announce the establishment of a new Office of Value for Money, using pre-existing Civil Service resource which will look to end "wasteful spending in government".
The office will "immediately begin work on identifying and recommending savings for the current financial year" and provide "targeted scrutiny of public spending so that value for money governs every decision government makes".
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