Prisons would be full by August without immediate action by ministers because of an “absolutely catastrophic inheritance” from the Conservatives, according to Environment Secretary Steve Reed.

He said that a review has found that the cost of the Rwanda deportation scheme had secretly soared from £400 million to £700 million.

Asked about the Labour’s claim about a £20 billion black hole in the public finances, Reed told GB News: “The Conservative government was not open and transparent about what was going on and we’ve come in with an absolutely catastrophic inheritance.

“Let me give you a couple of examples of how and what they covered up. The Rwanda gimmick, we believed going into the election, because the government, the previous government was telling us that they had spent £400 million to send just for volunteers to Rwanda.

“It turns out when Yvette Cooper is appointed Home Secretary and goes into the department, it was £700 million. That is 75% more than we were told, £300 million that the Conservatives cannot say how they’re going to fund.

“It’s examples like that that have inflated this black hole and this government intends to be open and transparent about doing the audit and Rachel [Reeves] will be reporting on that tomorrow and then, as we work towards the Budget, how are we going to get the public finances back in order.”

He told Camilla Tominey: “Let me give you another example of what we were told then what we actually found when we came into government. Prisons, it’s such an important issue…Shabana Mahmood was appointed Secretary of State for Justice, went into the department and was told that Rishi Sunak had received a letter ahead of the election, telling him that there was a critical failure point being reached and by August there’ll be no further prison places.

“Judges would not be able to incarcerate criminals who deserved custodial [sentences] because there will be no prison places, and we have had to take immediate action to stop that.”

Reed also said that improving water quality in the UK would not require taxpayers’ money and that £88 billion of investment would come from the private sector.

He said: “There’s a very profound problem here. It’s not an overnight fix, we need a long-term plan, but we will make sure that it’s broken down into milestones along the way so the public can see whether or not the water companies are meeting the targets that we give them.

“It won’t cost the taxpayer anything. This will come in through private sector investment.

“Ofwat has proposed an increase in bills over the next four years. Now, had the previous government taken these measures 14 years ago, then the sewage system would not have crumbled to the extent that it has and it wouldn’t be necessary to put our bills up, but we will not be turning to the taxpayer.

“This is private sector investment. £88 billion actually is the biggest ever investment in the water sector and will be the second biggest investment in the entire economy.”