Prime Minister Sir Keir Starmer is mounting a defiant defence of his government's first Budget, offering full support to Chancellor Rachel Reeves as she faces accusations of misleading the public about the state of the nation's finances to justify £26 billion in tax increases.
Budget Black Hole Controversy Erupts
The political storm intensified over the weekend after revelations that the Office for Budget Responsibility (OBR) had informed Ms Reeves as early as 17 September that the deficit had improved significantly, and confirmed in October that it had been eliminated entirely, leaving a £4 billion surplus rather than the £20 billion black hole she had publicly described.
Despite this positive news, in a major Downing Street speech on 4 November, the chancellor warned that weaker economic productivity had created "consequences for the public finances" and maintained that tax rises were necessary to address what she presented as a substantial fiscal gap.
Calls for Multiple Investigations
The controversy has triggered demands for formal investigations from both the Conservative Party and Reform UK. The Conservatives have called for the Financial Conduct Authority to investigate whether market rules were breached, while Nigel Farage's Reform UK has written to the prime minister's ethics adviser, Sir Laurie Magnus, requesting an inquiry into whether Ms Reeves violated the ministerial code.
Conservative leader Kemi Badenoch accused the chancellor of deliberately misleading the public, stating: "She called an emergency press conference, telling everyone about how terrible the state of the finances were, and now we have seen that the OBR told her the complete opposite." Ms Badenoch has called for Ms Reeves to resign over the matter.
Starmer's Full-Throated Defence
In what is being interpreted as a show of solidarity with his embattled chancellor, Sir Keir will use a speech on Monday to argue that Ms Reeves has delivered economic stability by raising billions in additional fiscal "headroom" to protect against future market shocks.
The prime minister will also defend the controversial decision to spend billions more on welfare benefits, including scrapping the two-child benefit cap—a move expected to lift 450,000 children out of poverty. He will reject what he characterises as performing political "toughness" on welfare, noting that under the previous Conservative government, "the welfare bill went up by £88 billion."
However, Sir Keir will also emphasise the need for welfare reform, arguing that the current system "is trapping people, not just in poverty, but out of work. Young people especially."
Ms Reeves has vehemently denied any wrongdoing, telling Sky News on Sunday: "Of course I didn't" lie to the public. She maintains that even a £4 billion surplus would have been "the lowest surplus that any chancellor ever delivered against their fiscal rules" and insufficient to address the country's economic challenges.
The chancellor also stressed her close working relationship with the prime minister, describing their partnership as one where Sir Keir was "kept fully informed of pre-Budget developments."
