Labour is scrambling to defend Rachel Reeves amid claims she “lied” to the public over the size of the so-called financial “black hole”.
The Chancellor had warned the public several times “tough decisions” would have to be made at her second Budget because of a £30billion gap in the nation’s finances.
But on Friday, the Office for Budget Responsibility (OBR) revealed it had actually told the Treasury on September 17 the “black hole” was £2.5billion, less than a tenth of what she claimed.
OBR chief Richard Hughes had written to the Treasury Committee confirming “at no point” did the Chancellor face a black hole greater than that amount.
By October 31, the fiscal watchdog said the black hole had disappeared and had in fact been replaced by a £4.2billion surplus.
Just four days later, she gave her pre-Budget Downing Street address warning how poor productivity would have “consequences for the public finances”, while families would need to “do their bit” to plug the gap.
In interviews this morning, the Chancellor claimed she “of course” did not deceive the public when she set out a gloomy economic picture.
“Anyone who thinks that there was no repair job to be done on the public finances, I just don’t accept that,” she said.
Rachel Reeves has insisted she did not lie to the public in her pre-Budget address
|
GETTY
“We needed to build more resilience, more headroom into our economy.
“That’s what I did, along with that investment in the NHS and cutting bills for families.”
The Conservatives and the Scottish National Party have written to the Financial Conduct Authority calling for an investigation into policy leaks in the run-up to the Budget and the Chancellor’s own comments.
Downing Street has denied the Chancellor misled the public, saying she had “talked about the challenges the country was facing”.
Rachel Reeves revealed £26billion tax hikes in her Budget this week
|
UK PARLIAMENT/PA
Sir Keir Starmer was quick to come to the Chancellor’s defence in a video posted to social media the morning after the Budget, insisting Ms Reeves’s statement was “fair and necessary”.
“Our first priority was to help with the cost of living,” the Prime Minister said.
“That’s why we were determined to take action on energy bills – and that’s what we’ve done.”
He later added: “We’re cutting our debt and our borrowing so we take no risks with the economy… by spending wisely and making fair tax choices.”
Sir Keir is also expected to defend the Budget and the Chancellor in a speech tomorrow setting out Labour’s long-term growth plans.
The PM will say “economic growth is beating the forecasts” but the Government must go “further and faster” to encourage it.
Speaking to GB News, Chief Secretary to the Treasury, James Murray MP, rejected claims Ms Reeves had “lied” about the fiscal “repair job” she faces ahead of the Budget.
When questioned by Camilla Tominey why Ms Reeves had allegedly lied, Mr Murray responded: “She didn’t. I reject your claims.”
Sir Keir Starmer insisted the Budget was ‘fair and necessary’ in a video posted to social media
|
X/KEIR STARMERHe added: “Because what the OBR set out at the end of October in their forecast. And firstly, it set out clearly that there had been a productivity downgrade of £16billion now going into the Budget process.
“We also knew we wanted to get headroom up, and that headroom is critical to helping to get the cost of Government borrowing and to getting mortgages down.
“So we went into the Budget with those priorities and the Chancellor set them out.
“She set out in her speech in early November that we needed more headroom, that everyone was going to be asked to make a contribution and that our priorities in the budget would be to cut the cost of living, cut NHS waiting lists and cut that Government borrowing.”
Reform UK deputy leader, Richard Tice, has called on Sir Keir to sack the Chancellor.
The Boston and Skegness MP said in a letter to Sir Keir “the circumstances surrounding the last few months and the 2025 Budget has been shambolic and shattered confidence for so many”.
His boss, Nigel Farage, has reported Ms Reeves to the PM’s independent ethics adviser, The Telegraph reports.
Mr Tice told GB News: “Confidence is shattered and frankly, we need a new Chancellor in order to restore confidence in our economy.”
Tory leader, Kemi Badenoch, also said Ms Reeves should stand down from her post over the Budget fall-out.
Reform deputy leader Richard Tice has called on the PM to sack Rachel Reeves
|
GB NEWS
Discussing the Chancellors pre-Budget address on November 4, Ms Badenoch told the People’s Channel: “It was a big press conference. The Cheerios briefing.
“You may remember I was giving a speech that day, and I had to stop what I was doing to watch it. And I just thought, what on earth was that?
“Why is she doing this? She knew exactly what she was doing… She was trying to send a signal to the markets.
“This is why we have written a letter to the Financial Conduct Authority. We think there may have been some market abuse, but the bottom line is that she told a lie.
“She said that there wasn’t any money. The OBR said that there was and has shown evidence that they had told her that she wanted to raise money for welfare and that’s what she did.”
Liberal Democrat deputy leader, Daisy Cooper, said the Chancellor has got “some very serious questions to answer”.
“I really hope that she comes herself to Parliament tomorrow to answer questions from MPs, rather than sending another minister in her stead,” she said.
“The Government obviously is democratically elected. The Government can make decisions, the Government can make those choices.
“But I think that if she’s got one piece of information and then goes out and says that something else is happening, that’s very destabilising for confidence of households and of the market.
“She’s got very serious questions to answer about why on Earth she went out there to do that pre-Budget speech, which is almost unheard of in this country.”