Sir Keir Starmer admitted that the upcoming Budget will be ‘painful’ in a gloomy speech about the state of Britain today – as he defended handing out billions to end strikes by militant unions.

In a downbeat speech from the Downing Street rose garden he warned that October’s financial statement – the first by Labour in 14 years – would involved ‘short-term pain’.

His remarks were seen as a further sign that he is rolling the pitch for Chancellor Rachel Reeves to unveil a swathe of tax rises and public service cuts as she seeks to balance the books.

Sir Keir laid the blame for the situation at the door of the last Tory administration, saying it left the economy ‘worse than we ever imagined’.

And he defended the decision to make the Winter Fuel Allowance available only to benefit recipients, saying it was a ‘difficult trade-off’ but everyone including pensioners, would benefit in the long term.

But he then also justified handing out £14billion to end strikes by militant rail and medical unions, without demanding they modernise their working practices.

‘We ended the national strikes that have crippled our country for years, because I defy anyone to tell me that you can grow the economy when people can’t get to work, because the transport system is broken, or can’t return to work because they’re stuck on an NHS waiting list,’ he said.

‘We’ve done more in seven weeks than the last government did in seven years. And these are just the first steps towards the change that people voted for, the change that I’m determined to deliver.’

The Prime Minister said he was ‘not going to pre-empt the Budget’ when pressed on what tax rises and spending decisions the Government is considering to announce on October 30, although he reiterated his pledge on the ‘triple lock for working people’.

Laura Trott, the Tory shadow chief secretary to the Treasury, said: ‘After promising over 50 times in the election not to raise taxes on working people Labour are now rolling the pitch to break even more promises.

‘The Chancellor is entitled to raise taxes to pay for her expensive choices and above inflation pay rises demanded by her union paymasters, but she should have had the courage to be honest from the start. This a betrayal of people’s trust and we will hold them to account for their actions.’

Sir Keir compared his task in No 10 to the communities that rallied round to clean up in the wake of the summer’s riots.

While the violence and disorder showed ‘the cracks in our society after 14 years of populism and failure’, he said they also ‘revealed the cure’.

Sir Keir Starmer said in 2011 he did not doubt that the courts could respond to the riots as needed, saying: ‘This time, to be honest with you, I genuinely didn’t know.

‘Every day of that disorder, literally every day, we had to check the precise number of prison places and where those places were to make sure we could arrest, charge and prosecute people quickly.

‘Not having enough prison places is about as fundamental a failure as you can get and those people throwing rocks, torching cars, making threats, they didn’t just know the system was broken, they were betting on it, gaming it. They thought ‘Ah, they’ll never arrest me and if they do, I won’t be prosecuted, and if I am, I won’t get much of a sentence’.

‘They saw the cracks in our society after 14 years of failure and they exploited them. That’s what we’ve inherited. Not just an economic black hole, a societal black hole and that’s why we have to take action and do things differently.’

Sir Keir’s speech came ahead of what has been dubbed a ‘fortnight of s***e’ in which ministers are set to make a series of doom-laden announcements, blamed on the Tories.

Kemi Badenoch, the shadow housing minister and candidate for leadership of the Conservative Party, said: ‘Keir Starmer is taking the British public for fools, but his dishonest analysis won’t wash. He campaigned on promises he couldn’t deliver and now he is being found out.

‘At the election Starmer and his Energy Secretary told us energy bills would go down under Labour – six weeks later they are going up. To make matters worse, he is removing the winter fuel payment many pensioners rely on to pay those bills.

‘Of course we made some mistakes in government. But remarkably, Labour are doubling down on those mistakes – from immigration to Net Zero policy. Worse still, they are prioritising the demands of their trade union paymasters over investment in public services.

‘The truth is that Keir Starmer is managing voters’ expectations for a decade of decline. A Conservative Party led by me will not let him get away with it. We will be ready to take on Labour with a renewed vision for a better country in 2030.’

In an unusual move, Sir Keir invited around 50 members of the public to attend the speech.

No 10 said the audience was made up of ‘familiar faces’ he met throughout the General Election campaign – including representatives from business, education and public services.

The PM said: ‘Next week, Parliament will return. The business of politics will resume, but it will not be business as usual.

‘Because we can’t go on like this any more. No more politics of performance, papering over the cracks, or division and distraction. Things are being done differently now.

‘When I stood on the steps of Downing Street two months ago, I promised this Government would serve people like you: apprentices, teachers, nurses, small business owners, firefighters – those serving the country every day.

‘I promised that we would be judged by our actions, not by our words. We will do the hard work needed to root out 14 years of rot and reverse a decade of decline,’ he is expected to say.

‘We’ll fix the foundations, protecting taxpayers’ money and people’s living standards. We’ll reform our planning system to build the new homes we need.

‘We’ll level up workers’ rights so people have security, dignity and respect. We’ll strengthen our border security. We’ll crack down on crime. We’ll transform public transport. And we’ll give our children the opportunities they need to succeed.’

Sir Ed Davey said ‘only the out-of-touch Conservative Party will deny the scale of the challenges’ facing Sir Keir Starmer’s Government, in his reaction to the Prime Minister’s speech.

The Liberal Democrats’ leader said: ‘From the millions stuck on NHS waiting lists to the millions struggling to make ends meet, the last Conservative government has left a toxic legacy. We need bold and ambitious action from the Government to fix this mess.

‘Liberal Democrats will work tirelessly to put our positive ideas forward and hold the new Government to account if they fail to rise to the challenges facing the country.

‘Above all, people want urgent, ambitious action to fix the health and care crisis.

‘Only by getting people off NHS waiting lists can we get the economy growing strongly again and ensure more funding for our public services in the long-term.’

Sir Ed earlier said: ‘Only the out-of-touch Conservative Party will deny the scale of the challenges facing the new Government and the new Parliament.’