Chancellor Rachel Reeves is fighting to defend her controversial Budget decisions amid accusations she misrepresented the economic outlook to justify massive tax increases.
The Budget Controversy Unfolds
The political storm erupted after the Office for Budget Responsibility published a letter to the Treasury Select Committee detailing exactly what forecasts it provided to the government during Budget preparations. The watchdog revealed it had told Ms Reeves as early as September 17 that productivity downgrades were being largely offset by better-than-expected tax revenues.
Despite this information, the Chancellor spent weeks warning of dire public finances, culminating in a £30 billion annual tax hike package by 2030-31. The OBR's final pre-measures forecast on October 31 actually showed the government meeting its fiscal rules with £4 billion of headroom.
Timeline of Treasury Communications
The OBR letter outlined a detailed chronology that contradicts the government's public messaging. On November 4, Ms Reeves delivered an unusual pre-Budget speech in Downing Street, highlighting productivity downgrades while omitting mention of tax revenue upgrades. This was widely interpreted as signalling imminent income tax increases.
Six days later, in a BBC interview, she insisted that balancing the books without income tax hikes would require cutting capital spending - something she ruled out. However, the market turmoil that followed media reports about abandoned income tax plans forced government sources to acknowledge the improved tax revenue situation.
Political Fallout and Defence
The revelations have triggered furious responses from opposition parties and the public. Conservative MPs have accused Ms Reeves of 'lying' to soften up the country for tax increases, while a Mail on Sunday poll found 68% of voters believe she should resign.
Shadow chancellor Mel Stride has requested a Financial Conduct Authority investigation into possible market abuse, suggesting knowingly false statements could have manipulated financial markets.
Downing Street has mounted a vigorous defence of the Chancellor, dismissing criticism as a 'silly row brought about by people who can't do maths'. Prime Minister Keir Starmer is due to hold a press conference where he's expected to fully support Ms Reeves, effectively intertwining their political fates.
Government sources argue that the OBR's forecast surplus didn't account for policy U-turns on winter fuel payments and welfare changes, which together cost around £10 billion annually. Ms Reeves maintains her tax decisions were 'fair and necessary' and insists she needed to rebuild government headroom after leaving only £10 billion space in her previous Budget.
