The warning has sparked fears of spending cuts and tax hikes
Rachel Reeves will set out the 'true state' of the public finances in a major speech in Parliament this afternoon .
The Chancellor is expected to announce spending cuts with reports suggesting major projects such as the multi-million pound rebuild of North Manchester General Hospital could be affected. It comes as Labour claim the Conservatives left a £20bn black hole behind. Speaking in the House of Commons at 3.30pm, Ms Reeves is expected to accuse the Tories of 'covering up' the true state of the public finances and refusing to take 'the difficult decisions'. But the Conservatives have hit back, saying that the 'books have been wide open'.But, according to the Treasury, the previous government overspent this year's budgets by billions of pounds after making a series of 'unfunded promises'.
Any tax increases to meet those costs would not be expected before the autumn Budget, the date of which Ms Reeves is also set to announce. During the general election campaign, Labour ruled out lifting income tax, VAT, national insurance and corporation tax. However, according to reports, Ms Reeves could announce delays to a number of key hospital and road programmes, arguing that they are 'unfunded with unfeasible timelines', in her speech today . This could involve postponing former Prime Minister Boris Johnson's flagship promise to build or expand 40 new hospitals - which includes plans to rebuild North Manchester General Hospital.
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