Chancellor Rachel Reeves is battling calls for her to resign after the Office for Budget Responsibility revealed she knew the UK's finances were in surplus before claiming a £20 billion deficit justified massive tax rises.
The OBR informed Reeves in September and October that improved tax revenues had eliminated a projected fiscal shortfall, providing over £4 billion in headroom. Despite this, she delivered a speech on November 4 warning of severe fiscal pressures and productivity problems. Days later, she announced a £30 billion tax package in the Budget.
Shadow chancellor Mel Stride has requested the Financial Conduct Authority investigate potential market abuse. He wrote that "investors, businesses and ordinary families will have taken decisions based on briefings from HM Treasury and public statements by ministers which we now know to have been misleading".
The accusations have sparked fury across the political spectrum. Tory leader Kemi Badenoch accused Reeves of having "lied to the public to justify record tax hikes". Former chancellor Nadhim Zahawi said: "She has to resign; her position is becoming untenable by the minute. She lied about the black hole, and she has sacrificed economic growth in favour of her misguided backbenchers."
Reform UK's deputy leader Richard Tice called for her removal, stating: "It is time to change course with a new chancellor and rebuild confidence with the British people."
Starmer backs embattled Chancellor
Prime Minister Keir Starmer is standing by Reeves, planning a press conference on Monday to support her Budget decisions. Downing Street dismissed the accusations as "categorically untrue", insisting her November speech was "entirely accurate".
A No 10 source said: "No 10 was aware of the content of the speech, which we believe entirely accurately outlined the need to raise revenues. The idea that there was any misleading going on about the need to raise significant revenue as a result of the OBR figures, including the productivity downgrade they contained, is categorically untrue."
Government allies have attacked the OBR for releasing the information. One source said it "feels quite adversarial for them to have put out the letter on Friday".
Political costs mount
The controversy has created internal tensions within Labour. One senior Labour figure said: "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."
Another MP added: "It's hard to see how they come back from this."
A Mail on Sunday poll found 68 percent of voters believe Reeves should resign, with only 32 percent saying she should stay.
Reeves defended her position, telling Sky News the productivity downgrade had a "big impact" and "that's why I had to ask people to contribute more". She insisted the tax rises were "fair and necessary".
The government argues the OBR's £4.2 billion surplus was "not a real surplus" because it didn't account for additional spending on winter fuel payments, welfare benefits, and scrapping the two-child benefit cap - decisions costing around £10 billion annually.
Note: This article was created with Artificial Intelligence (AI).
