Budget controversy erupts as fiscal watchdog challenges chancellor's claims
Chancellor Rachel Reeves is facing serious allegations of misleading the British public about the state of the nation's finances in the lead-up to last week's Budget announcement. The controversy centres on claims of a £20 billion fiscal black hole that justified significant tax increases.
The Office for Budget Responsibility (OBR) took the extraordinary step on Friday of publicly revealing that Reeves had been informed as early as September that their economic forecasts had only undergone minor downgrades. More significantly, the chancellor was told at the end of October that she was actually sitting on a surplus of approximately £4.2 billion.
OBR chairman breaks silence
Richard Hughes, chairman of the independent fiscal watchdog, described his decision to write to the Treasury select committee as an "unusual step". His letter detailed how the OBR's revised predictions showed that downgrades in productivity forecasts had been more than offset by increased tax revenues resulting from inflation.
Despite receiving this information, Reeves presented the economic outlook as unexpectedly bleak in the days following the October revelation. She argued that tax rises were necessary, insisting she must "deal with the world as I find it, not the world as I might wish it to be".
The chancellor maintained that public finances were in worse condition than anticipated after what she characterised as "years of economic mismanagement" by the previous government.
Political fallout and calls for resignation
The revelation has triggered immediate political consequences, with opposition leader Kemi Badenoch demanding Reeves's dismissal. 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."
In her strongly worded criticism, Badenoch accused the chancellor of political motivation rather than fiscal responsibility, claiming the Budget was about "bribing Labour MPs to save her own skin".
The OBR made clear that no significant alterations were made to its economic outlook after 31 October, yet Reeves ultimately chose to implement tax increases totalling £26 billion by the end of the forecast period.
The Treasury has been approached for comment regarding these allegations, but has not yet provided an official response. The controversy raises serious questions about the government's transparency in presenting its economic case to the public.
