Keir Starmer ‘knew there wasn’t black hole’ – but still signed off Rachel Reeves’s ‘lies’
The PM is said to have known the Chancellor faced a much smaller deficit in public finances.
Keir Starmer and Rachel Reeves in Downing Street (Image: Simon Dawson / No 10 Downing Street)
Downing Street has confirmed Sir Keir Starmer was happy with a speech given by Rachel Reeves, which gave the perception there was a £20 billion black hole in public finances when, in fact, it’s been revealed there was a surplus. In an extraordinary signal of support for Ms Reeves, who has been accused of misleading the public over the need for taxes in her Budget, Number 10 said the Chancellor was “entirely accurate”.
The backing of the PM appears to be at direct odds with the Office for Budget Responsibility (OBR), which said it told the Chancellor as early as October 31 that there was no longer a shortfall in the public purse. However, just days later, Ms Reeves gave a speech in Downing Street on November 4, saying she needed to raise taxes to plug a hole in the nation’s coffers.
She said Britain’s productivity was “weaker than we previously thought”, adding: “What I want people to understand ahead of the Budget is the circumstances we face. I could … sweep those challenges under the carpet. I am being honest with people.”
Sir Keir Starmer and Rachel Reeves are said to have worked together (Image: PA )
The Telegraph reports Downing Street officials said last night that Sir Keir was aware of the OBR figures given before Ms Reeves’ speech.
A Number 10 source told the paper: “Of cours,e Number 10 was aware of the OBR figures which showed the need for significant revenue-raising to meet our commitments and to achieve the desired headroom.”
The source continued: “No 10 was aware of the content of the speech, which we believe entirely accurately outlined the need to raise revenues.”
But on Friday, the OBR said it had informed the Chancellor as early as September 17 that an improved tax take from growing wages and inflation meant the shortfall was likely smaller than initially expected, and told her in October it had been eliminated altogether.
A senior Labour source told the Telegraph: “This looks pretty bad. Keir made a point of being more involved in the Budget from the beginning, and now it appears the story from the Chancellor is not what the OBR is saying. There are clearly questions for Keir and Rachel to answer.”
The Prime Minister is said to have signed off Ms Reeves’s Budget plans (Image: PA )
The Chancellor will face fresh scrutiny on Sunday’s media round over what she told the public and markets about the state of the economy.
The OBR’s disclosure has prompted Opposition figures to urge the Financial Conduct Authority (FCA) to investigate whether the Treasury deceived the public.
But Downing Street 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.
