These are the ticking Tory time bombs Labour must defuse as parliament returns

 Prime minister Keir Starmer has warned October’s budget will be “painful” and called on the country to “accept short-term pain for long-term good” after criticising the state of the nation inherited from the Tories. Labour must navigate a number of overlapping crises in the weeks and months to come. Some of them – as political tradition dictates – left by the previous Conservative government.

This was put into focus when the chancellor, Rachel Reeves, set out to “expose the scale of what has been uncovered” with a speech in parliament on 29 July where she accused the Tories of leaving a £20bn black hole in the UK’s finances.

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Meanwhile, Starmer said last week that change will take time, adding: “They saw the cracks in our society after 14 years of populism and failure – and they exploited them. That’s what we have inherited.”

Here are the crises hanging over from the Tories that Labour must solve urgently.

Homelessness

Homelessness has surged to record highs in recent months after the Tories failed in their bid to end rough sleeping. A damning report from the National Audit Office last month criticised the Conservatives for failing to have a long-term plan to prevent homelessness and warned numbers will rise in the months ahead. That’s despite more than 150,000 children now living in temporary accommodation in England. Labour has pledged to create a long-term plan, with deputy PM Angela Rayner set to head up an inter-ministerial group to deal with “shameful record homelessness”.

Housing

Rayner has also said that Labour “inherited the worst housing crisis in living memory”. 

That’s true – private rents are at record highs, high interest rates are still having an impact on mortgages after Liz Truss’s disastrous mini-budget and housebuilding is set to slump over the next year. 

The instability in the housing market plus high construction costs could see as little as half the promised 300,000 homes built.

Labour is reportedly set to announce social rents will rise above inflation for the next decade to offer certainty to housing associations while planning reforms are on the way in a bid to build up to 370,000 homes every year for five years.

Prisons

The far-right riots exposed a prisons crisis that was already at breaking point with some rioters being held in police cells. 

The average occupation rate in male prisons has been higher than 99% for 60 out of 69 weeks since the start of 2023 and at one point last October there were just 244 vacancies – at 99.71% capacity.

Reporting from The Guardian in July revealed Rishi Sunak had been warned that he risked ‘breaching legal responsibilities’ if he didn’t take action as the criminal justice system stood on the brink of collapse.

Labour has expanded the early release scheme to see prisoners released having served 40% of their sentence. But new prisons and a plan to pay for them are inevitably needed.

Household support fund

When former chancellor Jeremy Hunt extended the household support fund for six months in March, it came after 170 local authorities begged him to act to prevent families falling into crisis, homelessness, and poverty.

Now six months down the line, his successor Reeves is in the same position: with the Local Government Association warning six in 10 councils will not be able to provide any additional funding for local welfare support without an extension.

More than three quarters of councils said that a successor scheme should replace the household support fund from March 2025 with a greater focus in prevention.

Labour has promised more long-term certainty with a first spending review since 2021 to set budgets for the next three years and a pledge that one will follow at least every two years.

Immigration

With expensive Tory deterrence policies including the Rwanda scheme and Bibby Stockholm shelved on day one, Labour has pledged to go after criminal gangs with up to 100 specialist officers at the National Crime Agency (NCA).

But the party has faced accusations that it is following the Tory playbook.

Government statistics last week revealed the asylum backlog had barely budged, with decisions on claims plummeting ahead of the general election and the Home Office making decisions on 15,965 applications – down from 24,348 in the first three months of 2024. 

Marley Morris, IPPR associate director for migration, trade and communities, described the situation as a “tough inheritance” and said: “The backlog has barely changed in recent months as ministers were distracted by the Rwanda plan.”

NHS

Health secretary Wes Streeting said that his department’s default position was that the “NHS is broken” on his first day in charge.

Streeting has already brokered a deal with junior doctors to end strikes over a long-running pay dispute.

But all eyes will be on Reeves’ Budget to solve an underspend on the NHS under the Tories of £362bn since 2010, according to British Medical Association analysis.

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