Prime Minister Sir Keir Starmer has mounted a forceful defence of his Chancellor, insisting there was "no misleading" of the public or Cabinet over the state of the economy in the run-up to last week's Budget. His intervention comes amid a fierce political row and calls from the Conservative leader for Rachel Reeves to be sacked.
PM's Defence and Budget Fallout
Speaking at the Coin Street Neighbourhood Centre in London on Monday, Sir Keir was repeatedly forced onto the defensive. He directly addressed allegations that Ms Reeves misled the public during a November press conference, where she warned of dire public finances and hinted at potential income tax rises. It later emerged that the Office for Budget Responsibility (OBR) had provided more positive data on tax receipts ahead of the Budget, which unveiled £26 billion in tax increases.
"There was no misleading, and I simply don't accept... that being told that the OBR productivity review means you've got £16 billion less than you would otherwise have had shows that you've got an easy starting point," the Prime Minister stated. He admitted the government's starting point was not good, revealing there was a moment they thought a manifesto breach would be necessary, later avoided.
Resignation and Accusations of 'Human Shields'
The controversy triggered a significant resignation on Monday evening. Richard Hughes, the Chair of the OBR, stepped down following the publication of a damning internal investigation. The probe found the OBR's premature leak of Budget details to be the worst failure in its 15-year history. Mr Hughes said he was resigning to allow the watchdog to "quickly move on from this regrettable incident."
Conservative leader Kemi Badenoch seized on the event, claiming Ms Reeves had "lied to the public" and should be dismissed. She accused the Chancellor of trying to use the outgoing OBR head as "a human shield." Meanwhile, with Ms Reeves attending an investment event in Wales, her deputy, Chief Treasury Secretary James Murray, faced the Commons to address the emergency statement.
Internal Labour Unrest and Policy Shifts
The fallout has exposed tensions within the Labour government. Ministers have privately briefed that they too felt misled by Sir Keir and Ms Reeves before the Budget. One minister described the aftermath as "less than ideal," while MPs criticised the government's communications strategy.
There was also noted discontent over a perceived policy shift. Both Sir Keir and Ms Reeves had initially opposed scrapping the two-child benefit cap after their election in July last year, only to make its abolition the centrepiece of this Budget following pressure from backbenchers. Some MPs expressed frustration that internal grievances were overshadowing this policy win.
Concerns have emerged that allies of Health Secretary Wes Streeting might be attempting to capitalise on the disarray, potentially as a means to challenge Sir Keir's leadership. The Prime Minister now faces the dual challenge of managing a wounded Treasury and uniting a party showing signs of internal strain, all while the Opposition demands further investigations by the Financial Conduct Authority and the government's ethics adviser.
