Chancellor Rachel Reeves faces mounting pressure over accusations she concealed the true scale of government borrowing in her Budget. An analysis claims she is hiding a £1.3tn "debt mountain" while a separate row has erupted over whether she misled the public about the nation's finances to justify £26bn in tax rises.
The controversy intensified Tuesday when senior Office for Budget Responsibility figures revealed that James Bowler, the Treasury's top civil servant, approved the release of a letter showing Reeves knew her fiscal headroom was £4bn – far less dire than pre-Budget briefings suggested. The OBR letter, released Friday, sparked immediate calls for the Chancellor's resignation.
The hidden borrowing allegations
Sir John Redwood, Margaret Thatcher's former senior economics adviser, accused Reeves of building a "debt mountain" in a report co-authored with Brexit Facts4EU and reported by The Telegraph. The analysis claims the Budget conceals £1.3tn in additional borrowing – comprising £675bn to renew existing government loans and £628bn in increased spending over the next five years.
«Rachel Reeves is building a debt mountain whilst claiming to bring the debt down,» Redwood said in the report. «She wants to add a staggering £628bn to the state debt over the next five years, as if the £3tn the Government has already borrowed was not enough.»
The alleged hidden borrowing would push national debt to £3.53tn – equivalent to £50,840 per person. Annual interest payments would rise from more than £100bn to £125bn or more, according to the analysis.
Treasury chief drawn into Budget row
OBR committee members Prof David Miles and Tom Josephs told the Treasury select committee that Bowler approved publication of the controversial letter. The revelation deepened questions about whether the Treasury exaggerated financial challenges before the Budget to provide political cover for tax increases.
The OBR had informed Reeves her fiscal headroom was £4bn – only slightly down from £10bn in the spring. Yet pre-Budget briefings painted a far bleaker picture. An unnamed MP on the Treasury committee told The Telegraph that Bowler «was probably uncomfortable with the way the political team were leaking stuff and undermining the credibility of the Budget process.»
Treasury insiders denied any split between Bowler and Reeves, asserting the Chancellor approved the letter's release. OBR chairman Richard Hughes resigned Monday after accepting responsibility for an OBR forecast leak.
Political fallout intensifies
Sir Mel Stride, Tory shadow chancellor, wrote to Bowler demanding an investigation into Budget leaks. «The integrity of the Budget process matters, and we need clear answers from Rachel Reeves and the Prime Minister fast,» he said.
Reform leader Nigel Farage told The Telegraph he was «very surprised» not to have received a response from the Prime Minister's ethics adviser after calling for an investigation. «The British public deserves answers,» he said.
Bank of England Governor Andrew Bailey warned against "attacks" on the OBR, emphasizing its importance as an independent source of forecasting and fiscal assessment.
OBR denies Treasury conflict
Despite the tensions, OBR committee member Prof David Miles told MPs: «I wouldn't say we were at war with the Treasury... I mean, we have a very close relationship with the Treasury.»
The statement aimed to counter perceptions of open conflict between the two bodies, though the controversies have clearly strained relations.
What happens next
Reeves and Bowler are scheduled to appear before the Treasury select committee next Wednesday for questioning on how the Budget was "spun". The report co-authored by Redwood concluded: «All of us and our children and grandchildren will be paying for Reeves's debts for years to come.»
Reeves defended her Budget in the House of Commons last week, stating: «My fiscal rules will get borrowing down while supporting investment... I said we would cut the debt and we are.»
Note: This article was created with Artificial Intelligence (AI).
