Prime Minister Keir Starmer has publicly defended his Chancellor, Rachel Reeves, while simultaneously increasing pressure on the head of the government's independent spending watchdog following a significant pre-budget leak.
Prime Minister's Defence of Chancellor Amid Criticism
In a speech aimed at bolstering his Chancellor's position, Starmer robustly supported Rachel Reeves after days of criticism. Reeves had faced accusations of misleading the cabinet, MPs, and the public by citing a £16bn shortfall in the public finances to justify recent tax rises. The Prime Minister countered these claims directly, stating the government's starting point was impacted by an OBR productivity downgrade.
Starmer went further, admitting for the first time that in the run-up to the budget, he had considered breaking Labour's manifesto pledge not to raise income tax. "It was inevitable that we would always have to raise revenue. So there's no misleading there," he stated. "There was a point at which we thought, myself included, that we might have to reach for a manifesto breach of some significance." He clarified that as the process continued, they found a way to meet their priorities without that breach.
Starmer Ramps Up Pressure on OBR Chair Over Leak
The Prime Minister's comments come as the Office for Budget Responsibility (OBR) prepares to publish the findings of its leak investigation. The watchdog is expected to release its report on Monday afternoon, casting doubt on the future of its chair, Richard Hughes.
Starmer told the Guardian he was "very supportive" of the OBR as an institution, describing it as vital for stability and integral to the government's "iron-clad" fiscal rules. However, he pointedly stopped short of offering Hughes his full confidence. He labelled the premature release of market-sensitive budget details a "serious error" and a "massive discourtesy to parliament."
"I'm not going to suggest that what happened last week, which was the entire budget being published before the chancellor got to her feet, was not anything other than a serious error," Starmer said.
Setting Out Labour's Long-Term Economic Vision
Beyond the immediate political fallout, the Prime Minister used the opportunity to outline his government's multiyear economic strategy. He expressed confidence that the UK had "walked through the narrowest part of the tunnel" regarding the cost of living crisis.
His plan is built on three key pillars:
- Deregulation to stimulate business growth.
- Further overhauls of the welfare system, which he argued currently traps people in poverty and out of work.
- Moving towards closer ties with the European Union, acknowledging the current Brexit deal has hurt the economy.
Starmer was unequivocal about the need for a closer EU relationship for economic renewal, stating it would require "grown-up" discussions and trade-offs. He also highlighted personal pride in measures to tackle living costs, including energy bill cuts, rail fare freezes, and boosting the minimum wage, as well as lifting the two-child benefit limit.
Despite this, the Prime Minister levelled with the public, acknowledging the road ahead remains challenging. "I will level with you, as the budget showed, the path to a Britain that is truly built for all requires many more decisions that are not cost free, and they're not easy," he concluded.
