"Reeves on the brink over tax lies..."

[dutchman]

Chancellor fighting for job after being accused of misleading public over ‘black hole’ she used to justify massive raid on workers



Rachel Reeves misled the public over the state of the country’s finances as she plotted her £30bn tax raid, allegedly to save herself and Sir Keir Starmer.

The Chancellor was at war with the Office for Budget Responsibility (OBR) on Friday night after the watchdog published a blow-by-blow account of its discussions with the Treasury in the run-up to this week’s shambolic Budget.

It revealed that a series of statements in recent weeks from Ms Reeves and her officials falsely exaggerated the fiscal shortfall she faced, preparing the ground for her to raise taxes and welfare spending.

The futures of both Ms Reeves and Richard Hughes, the OBR chief, were in doubt after the Treasury attacked his decision to open up the “private space” for officials to debate forecasts and the effect of policy changes.

Mr Hughes will give evidence to MPs on the Treasury select committee next week. Ms Reeves will have to face questions about her actions from broadcasters on the Sunday morning television politics shows.

The revelations follow weeks of briefings from Treasury insiders to newspapers, including The Telegraph, that suggested the Government was facing a large shortfall in the public finances, with estimates of the size varying from £20bn to £30bn.

Sources close to Ms Reeves used this alleged hole to justify drawing up plans for a massive tax raid.

However, in a letter to the Treasury committee, Mr Hughes revealed that Ms Reeves had “at no point” faced a shortfall of more than £2.5bn.

Mr Hughes also confirmed that on Oct 31, the OBR had upgraded its forecasts and told Ms Reeves that she in fact had a £4.2bn surplus, even after taking into account a significant downgrade to productivity.

Yet four days later, Ms Reeves held a press conference in Downing Street, at which she made the case for tax rises and suggested that the watchdog’s forecasts were worse than expected.

In a press conference on Nov 4, Ms Reeves strongly suggested that she would be forced to break Labour’s manifesto pledge and raise income tax to help repair Britain’s finances.

She hinted that economic forecasts were challenging and that this had “consequences for the public finances” that she would not “sweep under the carpet”. She added: “I’m being honest with people.”

The following week, it emerged that the Treasury would not be increasing income tax. Sources claimed this was because “the facts had changed” as a result of an upgrade from the OBR.

However, in the OBR’s account, no changed forecast was issued between Ms Reeves’s press conference and the subsequent about-turn.

On Friday night, the Chancellor doubled down on her claims, telling The Guardian that she had to consider breaking the manifesto pledge because the OBR had not informed her of the details of its economic forecasts.

“We did look, as everyone knows, at income tax and National Insurance, that was a responsible thing to do, because we didn’t know the size of the downgrade, the productivity,” she said in an interview, which was given in the hours before the scandal broke.

Mr Hughes claimed that he had told the Chancellor about the productivity downgrade as early as Aug 7 – months before speculation began about an income tax raid – and then it was not changed again.

“We did not revisit that 0.3 percentage point reduction at any subsequent point in the forecast process,” Mr Hughes wrote in an open letter to Dame Meg Hillier, the committee chairman.

He added: “At no point in our pre-measures forecast process were either of the Government’s fiscal targets missed by more than £2.5bn.”

https://www.telegraph.co.uk/politics/2025/11/28/rachel-reeves-accused-of-lying-to-justify-tax-raid/

[rebbonk]

I think we all know that her CV is not exactly very accurate. Had you or I used an 'inaccurate' CV to gain a position, we would be dismissed and possibly face fraud charges.

But, it's OK when they do it!

[dutchman]

All the times Reeves falsely claimed there was a Budget black hole



Rachel Reeves is fighting to keep her job after falsely claiming that there was a multi-billion-pound hole in the public finances ahead of the Budget.

The Chancellor and her officials falsely indicated a huge shortfall in the figures, a move that helped to justify her £30bn tax raid as a crucial repair job, rather than a benefits spending spree placating backbench critics in Labour.

This was despite the Office for Responsibility (OBR) telling Ms Reeves that there was no deficit in the public finances. Its last estimate suggested that there was a surplus of £4.2bn before policy measures had been taken into account.

The Telegraph has examined all of the times Ms Reeves and government sources falsely claimed that Britain faced such a shortfall.

More than two months before Ms Reeves’s second Budget, ITV’s Robert Peston reported that the Treasury was assuming it would that need to raise taxes by £30bn.

A blog post by the broadcaster’s political editor said he had been told by “government sources” it would be “hard enough identifying £30bn of tax rises” that did not affect growth.

In a letter to MPs on the Treasury select committee, Richard Hughes, the chairman of the OBR, revealed that Ms Reeves had “at no point” faced a shortfall of anything close to this level.

In the run-up to every Budget, the OBR gives the Government a series of estimates about the public finances and whether the Chancellor is on track to meet the targets set out in its fiscal rules. Its first estimate, submitted on Oct 3, was a shortfall of only £2.5bn.

This was subsequently revised away, with a forecast on Oct 20 giving Ms Reeves £2.1bn of headroom and another on Oct 31 giving her £4.2bn.

Just under a month before the Budget, the Financial Times reported that Ms Reeves would be hit by a worse-than-expected downgrade to the OBR’s productivity forecast.

The newspaper cited a briefing from a Labour official to its journalists that there was “fury” in the Treasury about the timing of the forecast. It also cited analysis suggesting that the hole would constitute “a blow to the public finances of more than £20bn”.

The OBR’s productivity downgrade had been given to the Treasury months earlier and its impact on the public finances was relatively minor.

The estimate, which was shared with Treasury officials on Aug 7, was offset by “increases in real wages and inflation”, according to Mr Hughes.

In fact, by this point the OBR was not forecasting any hole at all – its latest estimates given to the Treasury predicted Reeves would meet her targets with £2.1bn to spare.

In an early morning Downing Street speech, Ms Reeves made the case for tax rises and suggested that the OBR’s forecasts were worse than expected.

Ms Reeves said: “The Office for Budget Responsibility – the UK’s public finance watchdog – will set out the conclusions of their review of the supply side of the UK economy.

“I will not pre-empt those conclusions but it is already clear that the productivity performance… is weaker than previously thought.”

Hinting at higher taxes as a result, she continued: “As I take my decisions on both tax and spend, I will do what is necessary to protect families from high inflation and interest rates, to protect our public services from a return to austerity and to ensure that the economy that we hand down to future generations is secure, with debt under control.”

The OBR had upgraded its overall economic forecasts on Oct 31, four days before Ms Reeves’s speech.

It told the Chancellor that she had a £4.2bn surplus, even after taking into account the downgrade to productivity.

Ms Reeves rolled the pitch for a breach of Labour’s manifesto pledge not to raise the rates of VAT, income tax or National Insurance for “working people” during the current parliament.

She said: “It would, of course, be possible to stick with the manifesto commitments, but that would require things like deep cuts in capital spending.

“And the reason why our productivity and our growth has been so poor these last few years is because governments have always taken the easy option to cut investment – in rail and road projects, in energy projects, in digital infrastructure.”

The OBR at this point was predicting a £4.2bn surplus in the public finances, meaning that it was false to claim that “deep cuts in public spending” would have been needed to balance the books without a manifesto breach.

It was widely reported that Ms Reeves and Sir Keir Starmer would abandon a planned 2p rise in income tax, which would have broken Labour’s manifesto promise around tax.

A source told the Guardian that the plans had been ditched and the reports were not denied by Downing Street. The Treasury briefed the Guardian’s journalists about Ms Reeves’s desire for “significant headroom”.

Another source said: “We had to put everything on the table but as the facts have changed we have to go through the process and look at the package. This is still a tax-raising Budget.”

As was true at the time of the Nov 4 press conference, Ms Reeves and the Treasury were aware at this point that there was a multi-billion pound surplus.

The facts had not changed at all – the OBR’s most recent forecast, predicting Ms Reeves had £4.2bn of headroom, had been given to the Treasury on Oct 31.

The productivity downgrade was issued in August. Mr Hughes has insisted it was not changed at any subsequent point in the forecast process.

After Ms Reeves delivered her Budget, she told the Guardian: “We did look, as everyone knows, at income tax and National Insurance – that was a responsible thing to do – because we didn’t know the size of the downgrade, the productivity.”

She said that after the Treasury submitted its most important policies to the OBR, “they then update their forecasts, both for growth [and] for wages”.

The Treasury had known about the size of the productivity downgrade for nearly four months by the time of Ms Reeves’s Budget. It had known that the Chancellor had sufficient headroom to meet her fiscal rules since Oct 3.

The Chancellor’s claim that she “didn’t know the size of the downgrade” when she raised the possibility of a manifesto-busting income tax raid was false.

https://www.telegraph.co.uk/politics/2025/11/30/all-the-times-reeves-falsely-claimed-budget-black-hole/