Prime Minister Sir Keir Starmer is expected to defend Chancellor Rachel Reeves on Monday after she denied misleading the public over the reasons for tax rises in last week's budget. Reeves announced £26bn in tax increases, which she said were needed to build economic resilience and protect public spending.
The controversy stems from conflicting messages. Before the budget, Reeves said tax rises were necessary because the Office for Budget Responsibility (OBR) was expected to downgrade growth forecasts. However, the OBR's subsequent report showed that while it did lower productivity expectations, strong wage growth and tax receipts offset the impact, leaving a smaller-than-expected shortfall.
Opposition MPs, including Conservative leader Kemi Badenoch, have called for Reeves's resignation, accusing her of misleading the public. Badenoch told the BBC: 'The chancellor called an emergency press conference, telling everyone about how terrible the state of the finances were, and now we have seen that the OBR had told her the complete opposite.'
Reeves defended her actions on Sunday, telling the BBC's Laura Kuenssberg that she increased fiscal headroom from £9.9bn to £21.7bn to ensure stability. She said: 'I know that some people are suggesting that there was a small surplus... but if I was on this programme today and I was saying £4bn surplus is fine... I think you would rightly be saying that's not good enough.'
Downing Street has backed Reeves, with a No 10 source stating: 'The idea that there was any misleading going on about the need to raise significant revenue as a result of the OBR figures... is categorically untrue.' Starmer's speech on Monday is expected to praise the budget for reducing the cost of living and inflation, and to announce new measures to boost economic growth.
