Income taxes will have to rise in order to plug Britain’s financial blackhole and allow for reforms, the former Bank of England governor has told Sky News.

Lord Mervyn King told Sophy Ridge’s Politics Hub programme we should all recognise “the very difficult position” that Chancellor Rachel Reeves has “inherited”, as he pointed to slow growth, a high budget deficit, large national debt and interest rates rising.

But he suggested rather than employers’ national insurance contributions, employees’ income tax is what should have been hiked when Ms Reeves announced her budget in October.

Lord King said increasing taxes would be needed in order to accommodate both a rise in defence spending and public services reform, adding: “The obvious tax to raise is the basic rate of income tax, we will all contribute to it.”

Following the budget, the chancellor received backlash after announcing employers’ national insurance contributions would be increased.

“I think it would have been better to have said in the budget, ‘look, the previous government was irresponsible in cutting employees’ national insurance contributions, but let’s be frank, we were pretty irresponsible in saying we wouldn’t reverse it’,” Lord King said.

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Lord King nonetheless thinks it is still possible for the government to say to people “maybe we said some silly things before the election” but “this is the situation Britain finds itself in, this is what we have to do over the next four to five years”.

He says the public wants politicians to be “honest”, even if that means raising taxes.

“But in the long run, to raise enough money, I think we will have to raise the basic rate of income tax. And I see no harm in doing that.”