As the last Labour Government left office in 2010, a note was scribbled. On headed paper, Liam Byrne said to his successor David Laws: “Dear chief secretary, I'm afraid there is no money. Kind regards – and good luck! Liam."

Workplace hijinks; an inside joke between two politicians. I’m glad they found it funny at least. What followed was 14 years of unrelenting austerity inflicted upon communities the length and breadth of the UK. Far from having no money left, government ministers clearly took leave of all their senses.

Austerity remains a prime contributor to the breakdown of social cohesion within some of our communities. It does not excuse for a second the violence and disorder over the past weeks but it does provide a breeding ground for the far right when people’s safety nets being ripped out from under them.

When state services begin to crumble – when folk feel like they can’t get a hospital appointment, or they face having their welfare benefits cut – they turn to people who question whose interests are being served by the state. They turn to actors who misguidedly blame refugees and migrants – some of the same people who work and uphold our public services – as the reason for their denigration.

The Chancellor’s announcement of a £22billion financial black hole until 2029 is the serious and quantifiable version of Liam’s note. Labour has inherited a mess, and no one should underestimate the cost of sorting that out.

First to the chopping block was the Winter Fuel Allowance. It’s a hard pill to swallow, particularly for the millions of pensioners who will have likely worked for the majority of their lives. They’ve contributed their national insurance, and they’ve paid their taxes.

They may even have built up savings – fair play to them. Even if they haven’t, it doesn’t mean they’re any less deserving of state support during the winter months, especially as we still recover from the shockwaves of the cost-of-living crisis. It's easy maybe to support the removal of this benefit from the small number of millionaire pensioners. Harder though to justify doing so for those just above the breadline.

The Government has chosen to honour the decisions of pay review bodies who quite rightly and independently have recognised that public service workers are desperately in need of a fair pay rise. Unfortunately, one third of the bill for this increase will be borne by departmental cuts, meaning reductions in spending on services.

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These are the two main prongs of the challenges now faced by the Scottish Government. Reduced consequentials from the Winter Fuel Allowance has already led to its abandonment here. This was accompanied by the Scottish Finance Secretary’s announcement of emergency spending measures including a public sector recruitment freeze in Scotland and a threat to such key commitments as the further rolling out of free school meals and the train peak fares pilot.

Cue the politicking. SNP ministers were quick out of the traps to attack Labour’s new measures and their impact in Scotland. Deputy Prime Minister Angela Rayner denied that the Scottish Government’s claim that it is forced to make cuts due the Chancellor’s announcement. Scotland’s opposition parties cited SNP financial mismanagement as the cause.

As usual the truth lies somewhere in between. The new Labour Government’s position is unenviable. It has inherited a right mess. However, it can’t really argue that the departmental cuts it is requiring to fund much-needed public sector pay rises don’t apply to Scotland. Equally though, as the Fraser of Allander Institute argued earlier this week, the Scottish Government’s now defunct Pay Policy, woefully underestimated the demands on the public purse.

And there are deeper and more fundamental issues that both governments, indeed all political parties need to address. The first is on tax. Any sensible economic commentator will tell us that the demands on the public purse are increasing. We have a major and ongoing shift taking place with an ageing population. We are also facing a climate crisis which will require billions in government investment to tackle. In this context it a total fantasy to maintain the position that taxes will not rise. To avoid this conundrum, governments always tack towards two trusty alternatives: growth and efficiency.

Unfortunately, productive and sustainable growth is increasingly hard to come by, and next to impossible without a public investment-led industrial strategy. Ultimately, austerity is the enemy of growth, squeezing demands from the economy and starving industry and public services of much-needed injections of cash. The creation of GB energy is a good start but will need to be scaled up over future years.

Efficiency is great, but it normally just means cuts and all too often results in services which are worse than when they started.

The truth is that the only meaningful question to ask is not whether we should tax more, but how and who we should tax more. Here, both Westminster and Scottish Governments probably have the right instincts, but do they have the will?

Capital Gains Tax should be top of Labour’s list. This should be swiftly followed both north and south of the border by a commitment to abolish the council tax and replace it with a progressive property tax. In the medium term a significant shift from taxation on earned income towards unearned income and assets is the only way forward.

So, as we look forward, with some trepidation, to a UK Autumn Financial Statement followed soon after by a Scottish budget for 2025-26, it is worth remembering that politicians have choices even if they don’t like to admit it. No one wants to talk about tax, but at some stage, we are going to have to.