The Budget fallout: did Reeves mislead us?

The Tory leader, Kemi Badenoch, accused Rachel Reeves of lying to the public so that she could fund increased welfare spending with tax rises in last week’s Budget. Reeves faced calls from the Conservatives, the SNP and Reform UK for her resignation.

In a speech on 4 November, the chancellor had raised expectations of tax rises by warning that the UK’s productivity was weaker “than previously thought”, and that this would have consequences for the public finances. But it emerged last Friday that the Office for Budget Responsibility had told the Treasury on 31 October that the downgrade in productivity would be offset by larger tax revenues from higher wages, meaning that Reeves was actually on course to meet her fiscal targets with £4.2 billion to spare.

Downing Street rallied to Reeves’s defence, insisting that there had been “no attempt to deceive in any form”. She also denied the charge, arguing that she had needed to put up taxes to increase her buffer against unexpected costs. On Monday, the OBR’s chair, Richard Hughes, resigned over his organisation’s accidental early publication of its analysis of the Budget.

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Reeves is guilty of “staggering mendacity”, said The Daily Telegraph. In the run-up to the Budget, she spun a “tale of doom and gloom” while neglecting to mention the OBR’s forecast about tax revenues. There was no urgent need to raise £26 billion in taxes; she just pretended there was so that she could buy off Labour MPs with an extra £16 billion in welfare spending. It’s outrageous that the OBR chief Richard Hughes had to resign after this “Budget fiasco”, rather than Reeves, said the Daily Mail. Polling shows that Labour is now even less trusted with the public purse than the Tories were under Liz Truss. If the chancellor “had an ounce of honour”, she’d stand down.

“Liar” is a strong word, said The Independent, and not one that can be fairly applied to Reeves in this case. While she could have been more transparent and perhaps overdid “the gloom”, she didn’t utter any falsehoods. What’s more, Reeves was right to point out that she needed to increase her fiscal headroom, and that the OBR’s £4.2 billion surplus didn’t take account of U-turns on the winter fuel allowance and disability benefits. A more valid charge against the Budget is that the combination of tax hikes and higher welfare spending is “not what Labour said it would do, nor was elected to do last year”.