Rachel Reeves has denied misleading the public over claims ahead of her Budget, saying she needed to build “more resilience” into the economy
Chancellor Rachel Reeves has defended her Budget measures following a row over her claim that she faced a £20 million gap in meeting her fiscal rules, saying an investigation into the incident wouldn’t be “necessary”.
Reeves repeated claims of the “black hole” in the country’s finances, despite the Office for Budget Responsibility (OBR) saying it told her as early as September 17 that the shortfall was smaller than first expected.
The OBR later said to her in October it had been eliminated altogether.
Justifying her Budget choices, which raised taxes by a total of £26 billion, Reeves said she needed to build more “headroom” in the economy.
Headroom refers to the amount of “wiggle room” the government has within its self-imposed fiscal rules.
The chancellor told ITV News: “Anyone who thinks there was no repair job to be done on the public finances, I just don’t accept that.
“We needed to build more resilience, more headroom into our economy, that’s what I did along with investment in the NHS and cutting bills for families.”
Following the OBR’s disclosure, opposition figures have urged the Financial Conduct Authority (FCA) to investigate whether the Treasury deceived the public.
Asked if she would welcome an investigation into the incident, Reeves said: “I don’t think that is necessary, the OBR have published their numbers.”
It comes as Prime Minister Sir Keir Starmer is set to back the Budget, with Downing Street commenting it was “categorically untrue” that the Chancellor misled voters over the scale of the “black hole” in public finances.
A Downing Street source has said: “No 10 was aware of the content of the speech, which we believe entirely accurately outlined the need to raise revenues.
“The idea that there was any misleading going on about the need to raise significant revenue as a result of the OBR figures, including the productivity downgrade they contained, is categorically untrue.”
The source also said Downing Street was aware of the OBR figures “which showed the need for significant revenue-raising to meet our commitments and to achieve the desired headroom”.
They continued: “Those figures reflected the OBR’s productivity downgrade. The right choices were then made to stabilise public finances through greater headroom, reduce energy bills and tackle child poverty.”
They said the OBR forecast had not accounted for increases in spending resulting from the scrapping of the two-child benefit cap and U-turns on winter fuel payments and welfare cuts.
Tory shadow chancellor Sir Mel Stride has reportedly written to the FCA urging it to look into “possible market abuse” arising from “misleading” comments and “the repeated disclosure of market-sensitive details of Budget decisions and the official forecasts”.
The leader of the Scottish National Party in Westminster, Stephen Flynn, also called on the City watchdog to launch an “immediate investigation into the accusations of false and deeply misleading Budget briefings”, questioning whether Ms Reeves’s November 4 speech amounted to “market manipulation”.
A Treasury spokesperson said: “We are not going to get into the OBR’s processes or speculate on how that relates to the internal decision‑making in the build‑up to a Budget, but the Chancellor made her choices to cut the cost of living, cut hospital waiting lists and double headroom to cut the cost of our debt.”
Starmer will use a speech on Monday to support the decisions taken by Reeves in the Budget and set out his long-term growth plans.
He will say “economic growth is beating the forecasts”, but that the Government must go “further and faster” to encourage it.
He will confirm reforms to the building of nuclear power plants, after the government’s nuclear regulatory taskforce found that “pointless gold-plating, unnecessary red-tape and well-intentioned, but fundamentally misguided environmental regulation had made Britain the most expensive place to build nuclear power”.
“We urgently need to correct this,” the Labour leader will say.
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