A number of posts on social media in recent weeks have appeared to compare two different ‘black hole’ figures—the “£22 billion black hole” which Labour has claimed it faced on entering government this year, and a “£158 billion black hole” which some say the Conservative-led government inherited in 2010.
One post on Facebook, for instance, said: “2010 Labour left £158 billion black hole! And this Labour can’t deal with the so-called £22 billion black hole!”
Other posts have cited the same two figures without necessarily suggesting they are so directly comparable, for example saying: “When Labour left office in 2010 they left behind a £158billion financial black hole which the Tories spent 15 years wrestling with, trying to bring government finances under control. This £22billion black hole which Labour are using as an excuse to hike up your taxes and cut pensioners winter fuel payments is the remnants of a financial crisis that they themselves created! [sic]”
Any direct comparison of the two figures is misleading, however, because they refer to two quite different things. The £158 billion figure appears to refer to the size of the deficit when Labour left office in 2010. The equivalent figure for the Conservatives’ last year in government in 2023/24 was estimated to be £122 billion.
The £22 billion figure meanwhile refers to what Labour says was a gap in government spending plans in 2024/25.
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What is the deficit?
The deficit refers to public sector net borrowing—broadly, the difference between what the government spends and what it receives in taxes over a given period.
The £158 billion figure in the posts we’ve seen appears to refer to what the annual deficit was previously estimated to have been in 2009/10 following the financial crisis (though it’s worth noting that the Office for Budget Responsibility now estimates the deficit actually stood slightly higher, at around £160 billion, in 2009/10).
The Conservative-led coalition and subsequent Conservative government made reducing the deficit a central part of their economic policy, reducing it to £45 billion by 2018/19. However borrowing then saw a substantial increase as a result of increased public spending during the pandemic, and in 2023/24, the last full year before the Conservatives left office, the deficit stood at £122 billion.
What about the ‘£22 billion black hole’?
The “£22 billion black hole” figure was first used by the chancellor Rachel Reeves in July this year. It was based on a Public Spending Audit conducted by the Treasury which found a forecast overspend on departmental spending in 2024/25 of £21.9 billion compared with spending totals set out in the Spring Budget.
This figure included extra spending on areas such as the asylum system, the transport budget and public sector pay.
This is not the same as the deficit (though government overspend which isn’t covered by higher tax revenue or spending reductions in other areas would increase the deficit). It instead refers to the amount that Labour said the government was likely to spend this year above what was originally budgeted.
The government’s use of the £22 billion figure has been heavily criticised by the Conservatives, including by former shadow chancellor Jeremy Hunt MP, who claimed it was “a political device to justify tax rises”.
In its recent Green Budget the Institute for Fiscal Studies said of this figure: “While some of the pressures were foreseeable, the total in-year spending pressures do nonetheless appear to be greater than could be discerned from the outside.”
We’ve looked at the “£22 billion black hole” claim and why it is disputed in much more detail here.