Labour’s leadership faces accusations of misleading the Cabinet after Rachel Reeves gave her Budget speech.
Sir Keir Starmer and Rachel Reeves, have been accused by ministers of deceiving the cabinet (Image: Getty)
Labour’s top brass, Sir Keir Starmer and Rachel Reeves, have been accused by ministers of deceiving the cabinet about a supposed hole in the public finances to justify controversial tax hikes in the recent budget, reports The Times.
Chancellor Reeves repeatedly emphasized a downgrade in productivity forecasts during cabinet meetings as she argued for raising taxes, convincing ministers that the public finances were in dire straits and that breaking Labour’s manifesto pledge by increasing the basic rate of income tax was necessary.
Chancellor’s private surplus knowledge not shared with cabinet
However, it has now emerged that the Office for Budget Responsibility (OBR) had already privately informed Reeves on October 31 that the productivity downgrade had been more than offset by higher than expected tax revenues, resulting in a £4.2 billion surplus. This crucial information was not shared with the cabinet or the public, with only Reeves and Starmer aware of the improved forecasts.
One furious cabinet minister questioned: “Why did Keir and Rachel allow the country to believe for so long that we would break our manifesto by putting up income tax by 2p when they would have known that wasn’t true? The handling of this budget has been a disaster from start to finish.”
Accusations of weakness and incompetence
Another senior minister described the Treasury’s operation as “not exactly cutting-edge” and expressed frustration at Reeves’ presentation of a “big hole we need to fill” despite the reality of the OBR forecasts. A third minister labeled Starmer and Reeves as looking “weak and incompetent” in the wake of the budget fiasco.
Reeves has rejected claims that she lied about the state of the public finances, insisting that the OBR figures did not take into account her decision to include £22 billion in headroom to cushion future financial shocks or the cost of government U-turns on welfare and winter fuel payments.
She told the BBC: “That [the £4.2 billion surplus] would have been the lowest surplus that any chancellor ever delivered against the fiscal rules. I was clear I wanted to build up that resilience, and that is why I took those decisions.”
Reeves also confirmed that Starmer was fully aware of the OBR’s financial forecasts, describing their working relationship as “a partnership.”
Prime Minister to address budget controversy in welfare reform speech
Amid the growing controversy surrounding the budget, Prime Minister Starmer is expected to use a speech in London on Monday to attempt to bolster support for the fiscal plan by focusing on a commitment to reforming welfare.
The move comes as Reeves faces intense scrutiny over her handling of the budget and the accusations of misleading both the cabinet and the public about the true state of the nation’s finances.
Opposition demands answers from chancellor
Opposition parties are now calling for Reeves to face an urgent question in parliament to address the claims that she misled the public and the markets. Reform UK leader Nigel Farage has formally requested an investigation into potential breaches of the ministerial code.
Meanwhile, shadow chancellor Alex Burghart has written to Starmer demanding that Reeves answer questions before MPs, accusing her of “a serious breach of trust with parliament and the British people.”
As the Labour government attempts to navigate the fallout from the controversial budget, all eyes will be on Starmer’s speech on Monday to see if he can successfully shift the narrative and regain public trust in the face of mounting criticism from both within his own party and the opposition benches.
