Chancellor Rachel Reeves has received significant backing from a senior official at the Office for Budget Responsibility (OBR) following accusations from political opponents that she misled the public about the state of the nation's finances in the run-up to the recent Budget.
Row Over Pre-Budget Warnings
The controversy centres on warnings issued by Ms Reeves ahead of the Budget statement, where she suggested a significant fiscal shortfall that necessitated tough decisions, including a series of tax increases. However, it later emerged that the OBR had informed the Treasury on October 31 that the government was actually forecast to have a £4.2 billion surplus.
Tory leader Kemi Badenoch has led the charge against the Chancellor, repeatedly calling for her resignation. Ms Badenoch accused Ms Reeves of creating an overly pessimistic "smokescreen" to justify raising taxes and claimed the Chancellor had "lied to the public".
OBR Committee Member Weighs In
Professor David Miles, a member of the OBR's steering committee, was questioned by MPs on the Commons Treasury Committee about the issue. He offered support for the Chancellor's position, stating he did not believe her pre-Budget comments were misleading.
"I don't think it was misleading for the Chancellor to say the fiscal position was very challenging at the beginning of that week," Professor Miles told the committee. He emphasised that the Chancellor was faced with having to make "very difficult choices", a view consistent with the OBR's own assessment delivered to the Treasury.
He explained that the forecast surplus did not account for two major government U-turns on winter fuel payments and benefits, which subsequently placed additional strain on the public purse. Furthermore, Prof Miles highlighted the OBR's warning about "wafer thin" headroom—the minimal financial buffer left after meeting fiscal rules—which Ms Reeves cited as a key reason for bolstering the nation's resilience against future economic shocks.
Broader Context of Budget Leaks and Resignation
The hearing took place amid ongoing tension between the Treasury and the OBR, following a Budget process marred by leaks. The committee had originally been scheduled to hear from OBR chair Richard Hughes, but he resigned on Monday, taking responsibility for the chaotic pre-release of Budget details.
Professor Miles sought to downplay suggestions of a major rift, telling MPs: "I wouldn't say we were at war with the Treasury. We have a very close relationship." However, he confirmed the OBR had formally raised concerns with Treasury officials about the damaging leaks, stating plainly that "we didn't find this helpful."
The Chancellor has consistently defended her approach, pointing to the OBR's downgrade of UK productivity forecasts as a primary driver behind the £26 billion in tax rises announced in the Budget. This downgrade, she argued, had a profound impact on the fiscal outlook, justifying the difficult decisions taken.
