Seems like the most obvious answer is that both things are true. We have a squad that is not good enough for where we want to be: consistenly in the top 5. That squad has been decimated by injuries for the last 12 months, exacerbating the issue.
But our squad is far better than the performances and results that we've had over the last 12 months. That is the sole reason Ange lost his job. He lost his job because a squad that should finish in the top 8 (at least) finished 17th. Frank was brought into correct that. He inherited a squad that is better than it is currently showing, again in both performances and results. Frank was a popular choice because the general consensus was that he was a manager that could produce a team better than the sum of its parts. Like Palace, Bournemouth, Forest etc, but with a Spurs budget.
We need to improve the squad, and Frank needs to improve performances in the meantime.