Downing Street has rejected claims that Chancellor Rachel Reeves misled the public about the state of public finances ahead of the budget. At the No 10 lobby briefing, the Prime Minister's spokesperson dismissed suggestions that Reeves exaggerated the need for tax rises, despite an Office for Budget Responsibility (OBR) letter indicating that the fiscal outlook was not as dire as portrayed.
The controversy stems from Reeves' statements in early November, where she warned that downgraded productivity growth forecasts would make it very difficult to meet her fiscal rules without deep cuts to capital spending. However, an OBR letter released today shows that the Treasury was informed before the budget that higher real wages and inflation would largely offset the productivity downgrade, raising questions about the claimed £20bn black hole.
Conservative leader Kemi Badenoch accused Reeves of lying to justify tax increases, but the PM's spokesperson insisted the chancellor had set out the challenges facing the country and made 'fair and necessary' choices to deliver investment and reduce child poverty. The spokesperson also noted that Reeves aimed to increase fiscal headroom, which explained her emphasis on productivity challenges.
Labour MPs believe Keir Starmer's leadership is secure until at least the May elections, though few expect the budget to revive the party's fortunes. Meanwhile, Starmer faces backbench anger over a U-turn on day-one worker protections against unfair dismissal, which breaches the Labour manifesto.
