Downing Street has rejected accusations that Chancellor Rachel Reeves misled the public about the state of the public finances ahead of the October budget. The Prime Minister's spokesperson insisted that Reeves had set out the challenges facing the country and made 'fair and necessary' choices to invest in public services.
The controversy follows the release of a letter from the Office for Budget Responsibility (OBR) showing that Reeves was told before the budget that a downgrade in productivity growth forecasts was largely offset by higher tax receipts from wage increases and inflation. This has led to claims from Conservative leader Kemi Badenoch that Reeves 'lied to the public' to justify tax rises.
At the No 10 lobby briefing, the spokesperson was asked why Reeves had warned in early November that meeting fiscal rules would require 'deep cuts in capital spending' if she did not raise taxes. The spokesperson said the chancellor had explained the need for increased 'headroom' in the budget and rejected suggestions that her warnings were disingenuous.
The OBR letter raises questions about why government sources previously told journalists that Reeves dropped plans for an income tax rise because forecasts improved just before the budget, when in fact the forecasts had been stable for weeks. Labour MPs have expressed concern that the budget, while avoiding major damaging measures, is unlikely to revive the party's fortunes.
