Chancellor Faces Fury Over Budget 'Deception'
Chancellor Rachel Reeves is confronting allegations of deliberately misleading the British public and financial markets after explosive revelations from the Treasury's independent watchdog.
The Office for Budget Responsibility has disclosed that Ms Reeves was informed as early as September that revisions to tax revenues had nearly completely offset a £20 billion productivity downgrade.
The Timeline of Truth
In a damning letter to the Treasury Select Committee published today, OBR chair Richard Hughes detailed exactly when the Chancellor received crucial information about the state of public finances.
The watchdog transmitted its Round 1 forecasts showing reduced productivity growth to the Treasury on September 17, with public finance forecasts following on October 3.
Most significantly, by October 31 - nearly a month before the Budget - the OBR confirmed Ms Reeves was meeting both her fiscal rules without requiring any action, providing her with more than £4 billion in headroom.
Despite this knowledge, the Chancellor proceeded to deliver what she described as "extraordinarily grim" warnings about the government's financial position in the run-up to the Budget.
Contradictory Public Statements
On November 4, Ms Reeves delivered an unusual "scene setter" speech in Downing Street where she hinted at breaking Labour's manifesto promises not to increase income tax.
She told journalists: "The OBR will set out the conclusions of their review... it is already clear that the productivity performance is weaker than previously thought. That has consequences for the public finances too, in lower tax receipts."
Six days later, in an interview with BBC Radio 5 Live, she escalated her warnings, insisting that the only alternative to income tax rises would be "deep cuts to capital spending" - something she made clear she wouldn't consider.
Yet according to the OBR's timeline, she had known for weeks that neither option was necessary to balance the books.
Political Fallout and Denials
The revelations have sparked political fury, with Tory leader Kemi Badenoch demanding the Chancellor's immediate dismissal.
Posting on X, Ms Badenoch stated: "Yet more evidence, as if we needed it, that the Chancellor must be sacked. For months Reeves has lied to the public to justify record tax hikes to pay for more welfare."
She accused the Budget of being "about politics: bribing Labour MPs to save her own skin."
Tory frontbencher Neil O'Brien suggested the deception was strategic, claiming: "She lied so that she could produce 'better than expected' numbers and say rates were not going up as a budget 'rabbit'."
Downing Street has vigorously denied that Ms Reeves misled the country, with a spokesman insisting she had been "very clear" about her decisions.
When pressed that markets could have been "significantly misled", the spokesman responded: "I don't accept that. As she set out in the speech she gave here, she talked about the challenges the country is facing."
The Budget Reality
Despite the OBR's confirmation of adequate headroom, Ms Reeves announced a staggering £30 billion package of tax rises in Wednesday's Budget.
A substantial portion of this revenue was allocated to benefit increases that had been demanded by rebellious Labour MPs.
The Chancellor had already reversed her earlier hints about income tax increases, though this U-turn only emerged after the information was leaked to the Financial Times.
Shadow business secretary Andrew Griffith declared that Ms Reeves had "debased her own currency and should resign", emphasising that Chancellors are held to higher standards as regulators of financial market conduct.
The controversy raises serious questions about transparency in government economic planning and the relationship between the Treasury and its independent watchdog.
