Chancellor Under Fire for Pre-Budget 'Black Hole' Narrative
Chancellor Rachel Reeves is facing intense pressure and calls for her resignation following a revelation from the UK's independent fiscal watchdog. The Office for Budget Responsibility (OBR) has disclosed that it informed Ms Reeves as early as September that there was no significant hole in the public finances, contrary to the grim economic warnings she issued in the run-up to her Budget announcement.
In an extraordinary move, the OBR published a letter detailing its communications with the Treasury. It revealed that on September 17, the watchdog told the Chancellor that a forecasted productivity downgrade was more than offset by a rise in tax revenues. Crucially, by the end of October, the OBR confirmed she was sitting on a £4.2 billion surplus and was on track to meet the government's fiscal targets.
A Series of Grim Warnings and a Surprise Giveaway
Despite this knowledge, Ms Reeves continued to paint a dire picture of the nation's economic health. Just four days after learning of the surplus, she held a highly unusual press conference in Downing Street, speaking of the severe 'challenges' she faced. She repeatedly hinted at the possibility of an income tax hike, a move that would have broken a key Labour manifesto promise, in interviews as late as November 10.
When the Chancellor finally stood at the despatch box on Wednesday, she announced a £30 billion package of tax rises. A significant portion of this revenue was directed towards a substantial welfare benefits increase, a measure demanded by mutinous Labour MPs, leading some critics to label it a 'Benefits Street Budget'.
The narrative collapsed when the OBR's letter became public, showing the Chancellor was aware of the healthier fiscal position while making her warnings. She has since claimed that considering an income tax rise was 'a responsible thing to do' because the 'size of the downgrade' was unknown.
Political Fallout and Mounting Pressure
The revelation has sparked fury across the political spectrum. Conservative leader Kemi Badenoch accused Ms Reeves of having 'lied to the public' to justify 'record tax hikes' and called for her to be sacked. She stated, 'Her Budget wasn’t about stability. It was about politics: bribing Labour MPs to save her own skin. Shameful.'
Shadow Chancellor Sir Mel Stride also called for Ms Reeves to quit, telling the Daily Mail that her 'broken tax promises and the briefing debacle' had real consequences for the economy and the public.
Think tanks and economic experts have echoed the condemnation. Julian Jessop of the Institute of Economic Affairs branded the 'scale of deceit' as 'shocking', while Paul Johnson, a former director of the Institute for Fiscal Studies, said her November 4 press conference 'probably was misleading'.
Public opinion, as measured by a YouGov poll, has delivered a thumbs down to the Budget. Only 21 per cent of voters thought it was fair, while 48 per cent said it was unfair. Just 11 per cent believe Ms Reeves is doing a good job, with 59 per cent stating she is performing badly.
Downing Street has come to the Chancellor's defence, with a spokesman insisting she had not misled the public or markets and had set out her decisions 'incredibly clearly'. A Treasury spokesman declined to comment on the OBR's processes, instead highlighting the Chancellor's choices to 'cut the cost of living' and 'cut hospital waiting lists'.
