Prime Minister Sir Keir Starmer is set to deliver a speech on Monday aimed at deflecting attention from the row over Chancellor Rachel Reeves' budget, as the Conservatives continue to question her ethics. Allies say the political fates of Starmer and Reeves are intertwined, with the Tories accusing Reeves of lying about the rationale behind record-breaking tax rises.
In an article for the Guardian, Starmer defended the budget, stating: 'We made the right choices for Britain, cutting the cost of energy with £150 off bills, protecting the NHS and tackling the scourge of child poverty by removing the two-child limit.' He will argue that his programme – including welfare reform and deregulation – is a 'big, bold long-term plan' and not a 'set of quick fixes'.
The row centres on whether Reeves misled the public about the Office for Budget Responsibility's (OBR) productivity forecasts. The Conservatives claim she used reduced productivity predictions as a smokescreen for tax rises, despite the OBR also upgrading wage and tax receipt forecasts, leaving a surplus. Kemi Badenoch has accused Reeves' allies of trying to manipulate financial markets by briefing that she had dropped a plan to increase income tax rates after better-than-expected OBR news.
A letter from OBR head Richard Hughes to the Treasury select committee clarified that Reeves and her team had known about the improved outlook for some time, even when she gave a pre-budget speech warning of consequences from lower productivity. The letter appeared to correct Treasury briefings aimed at calming investors, and further irritated the independent forecaster after weeks of criticism from the chancellor.
Reeves argued on Sunday that higher taxes were needed to protect her fiscal rules and keep borrowing costs down. However, polling from More in Common after the budget shows just 16% of voters think the chancellor is doing a good job. Starmer hopes voters will feel the impact of higher public spending and deregulation in time, but with daily life slow to improve, he may find that time is a luxury he does not have.
