Chancellor Rachel Reeves is battling accusations that she misled the public about the state of Britain's finances ahead of last week's budget, which introduced £26 billion in tax rises.
The OBR Revelation That Changed Everything
The political storm erupted after the Office for Budget Responsibility (OBR) took the unusual step of publishing its private forecasts submitted to the Treasury in the ten weeks before the budget. In a letter from OBR chair Richard Hughes, already under fire for budget leaks, the official watchdog revealed a timeline that contradicts the government's narrative of a massive financial black hole.
The crucial OBR forecasts showed:
- 17 September: Initial forecast projecting a £2.5 billion deficit by parliament's end
- 20 October: Deficit transformed into a £2.1 billion surplus
- 31 October: Final pre-budget forecast showing a £4.2 billion surplus
Chancellor's Dire Warnings Versus Financial Reality
Despite the improving financial picture, Rachel Reeves presented a starkly different story to the public and media in the weeks leading to the budget.
On 13 October, she told Sky News the productivity downgrade had been "challenging" and indicated she was "looking at tax and spending." By 27 October, with the Treasury aware the deficit had been wiped out, briefings to the Financial Times mentioned a "£20 billion hit to public finances."
On 4 November, Ms Reeves held a dawn news conference at Downing Street, stating she wanted people "to understand the circumstances we are facing" and that "we will all have to contribute." Six days later, she told BBC 5Live that sticking to Labour's tax promises would require "deep cuts in capital spending."
Political Fallout and Defence
The revelations have triggered fierce criticism from opposition parties and economic experts. Conservative leader Kemi Badenoch declared: "We have learned that the chancellor misrepresented the OBR's forecasts. She sold her 'Benefits Street' budget on a lie. Honesty matters... she has to go."
Economist Paul Johnson, former director of the Institute for Fiscal Studies, told The Times the chancellor's 4 November briefing "probably was misleading. It was clearly intended to have an impact and confirm what independent forecasters had been saying. It was designed to confirm a narrative that there was a fiscal hole that needed to be filled with significant tax rises. In fact, as she knew at the time, no such hole existed."
The Prime Minister's spokesperson has defended Ms Reeves, insisting she did not mislead voters and properly set out her choices and reasons during the budget. Meanwhile, Sir Keir Starmer is preparing to use a speech on Monday to support the chancellor's budget decisions and outline long-term growth plans, praising the package for "bearing down on the cost of living" and ensuring economic stability.
As Rachel Reeves prepares for a challenging round of Sunday interviews, she faces tough questions about why markets and voters received such conflicting messages about the nation's finances during the budget's chaotic preparation.
