Chancellor Rachel Reeves is confronting her second potential ethics investigation within a month, following a formal complaint lodged by Reform UK leader Nigel Farage regarding controversial statements made ahead of last week's Budget.
The Budget Black Hole Controversy
Nigel Farage reported the Chancellor to the independent adviser on ministerial standards, Sir Laurie Magnus, concerning what he termed 'false claims' about a black hole in the public finances exceeding £20 billion. This accusation comes despite it later emerging that the Office for Budget Responsibility (OBR) had informed Ms Reeves she actually had billions of pounds to spare.
Mr Farage asserted that the Chancellor's conduct in the pre-Budget period was of 'grave concern' and 'plainly meet the threshold for investigation'. He argued that voters were facing 'the heaviest tax burden in generations' based on what appeared to be a 'sustained misrepresentation of the true fiscal position'.
Deepening Political Fallout
The scandal has drawn in Prime Minister Sir Keir Starmer, after Ms Reeves insisted their relationship was 'a partnership' and that he was aware of the OBR surplus and supported her approach. This revelation has reportedly caused tension, with The Times indicating that even some of her ministerial colleagues feel misled. A senior figure claimed: 'At no point were the Cabinet told about the reality of the OBR forecasts.'
This is the second ethical challenge for the Chancellor in a short period. At the end of October, she was rebuked for failing to obtain a licence for renting out her family home.
Farage's complaint detailed a 'sustained public and media campaign portraying the public finances as being in a state of collapse', which he suggested was used to justify a subsequent £30 billion tax raid. He highlighted that 'Treasury officials repeatedly briefed journalists about an alleged "black hole" of £22billion and even £40billion, figures incompatible with OBR forecasts the Chancellor had seen', noting there was no indication she corrected these briefings.
Potential Investigations and Mounting Pressure
The allegations suggest a potential breach of the Ministerial Code, which mandates ministers to 'give accurate and truthful information to Parliament' and 'be as open as possible with Parliament and the public'.
Beyond the ethics probe, the Chancellor could face scrutiny from the Financial Conduct Authority (FCA). The Conservatives have accused her of 'possible market abuse', alleging that 'briefings, leaks and spin from HM Treasury' caused volatility in the City. They have demanded she appear in the Commons to 'explain the extent to which she misled the public'.
Shadow Chancellor of the Duchy of Lancaster, Alex Burghart, told Sir Keir that these briefings affected 'the integrity of the fiscal process, the rights of Members of Parliament and more importantly the lives of working people'.
Market analysts and former Bank of England officials have added their voices to the call for an inquiry. David Morrison, a senior market analyst at Trade Nation, stated: ‘The FCA should investigate.’ Former interest-rate setter Andrew Sentence accused her of 'duping us about her discussions with the OBR', while Andy Haldane, former chief economist at the Bank, said an 'inquiry into this Budget is needed, regulatory or Parliamentary'.
Tory leader Kemi Badenoch reiterated her call for Ms Reeves to resign, pointing to an 'emergency Press conference... about how terrible the state of the finances were' which now contradicted the OBR's information.
Reeves' Firm Denial
In her first media appearances since the OBR revelations surfaced on Friday, the Chancellor strenuously denied any wrongdoing. Appearing on Sky News and the BBC, she rejected suggestions she had misled the public.
When asked on Sky News if she had lied, she shot back: ‘Of course I didn’t.’ To the BBC, when told she had ‘misled people in the run-up to the Budget’, she insisted: ‘No, I do not accept that at all.’ She expressed full confidence in her ability to carry on, stating: ‘Yes I am sure, and I am determined.’
Despite her denials, the pressure is mounting, with multiple potential investigations looming and significant criticism from across the political and financial spectrum.
