Rachel Reeves has accused Jeremy Hunt of lying about the state of the public finances, escalating a row with the Conservatives over claims they left a £22bn hole in the public finances.
The chancellor claimed that her predecessor “knowingly and deliberately … lied” to MPs and the country about public spending.
“Jeremy Hunt covered up from the House of Commons and the country the true state of the public finances. He did that knowingly and deliberately,” she told Sky News. “He lied, and they lied during the election campaign about the state of the public finances.”
Hunt has rejected the claims and on Monday night wrote to Simon Case, the cabinet secretary and the had of the UK’s civil service, disputing the Labour government’s assessment.
In his letter he demanded an “immediate answer” to “conflicting claims” which risk “bringing the civil service into disrepute”, and said that either the spending plans in estimates signed off by senior civil servants were incorrect, or the document Reeves produced to the Commons on Monday was incorrect.
Citing a £22bn hole in the public finances, Reeves scrapped a series of Conservative policies on Monday including a long-anticipated cap on social care costs, plans to build 40 hospitals and various road projects.
She also cut winter fuel payments to 10 million wealthier pensioners, reversing a policy introduced by Gordon Brown in a move that will save £1.5bn in the next financial year.
The number of pensioners receiving the winter fuel payment will be reduced from 11.4 million to 1.5 million as a result of the decision to means test a benefit worth up to £300 for a household with at least one member aged over 80.
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The Conservatives pointed out that while Labour was in opposition last autumn, Darren Jones, the current chief secretary to the Treasury, wrote to Hunt questioning whether he was planning to scrap winter fuel allowance for some pensioners.
In his letter in November, Jones said pensioners would be “deeply concerned” and “anxious that their incomes may be under threat from this government”.
It was also pointed out that nearly half the shortfall cited by Reeves, £9.4bn, resulted from her decision to fund above-inflation public-sector pay recommendations in full.
Asked how much it would cost to settle junior doctors’ pay, the chancellor told Times Radio: “It’s £350m – and that’s a drop in the ocean … It cost £1.7bn to our economy last year because of industrial action. It caused huge misery, pain and agony for people waiting for appointments that never happened.”
She argued that public sector workers including junior doctors were getting pay rises in line with the private sector and deserved to do so.
Reeves also defended her decision to scrap the planned cap on social care costs, saying she had been forced to make “incredibly difficult decisions”.
“What I inherited … is a gap between what the previous government said it was going to spend and what it was actually spending of £22bn so I’m in a position of having to make urgent decisions to restore economic stability and financial stability,” she told the BBC Radio 4 programme. “I was determined to ensure that we got a grip of these pressures.”
“When I did the audit with Treasury officials of the state of public spending and the public finances we discovered that some of the promises that the previous government made did not have any funding attached to them. Social care was one of those things. New hospital programmes was another. Transport spending was another. The replacement of A-levels was another. Asylum were another.”
“There are lots of difficult decisions that I had to make yesterday, decisions that I didn’t want to make, decisions that I never expected to make,” Reeves said. “There are a lot of things that this new Labour government would like to do. But unless you can say where the money is going to come from, you can’t do them.”
She said Wes Streeting would take forward plans to work with the sector to reform social care.