Downing Street refutes allegations that Chancellor Rachel Reeves misled the public or financial markets regarding the public finance deficit. Reeves had hinted at a potential income tax increase in the Budget to address a projected £20 billion shortfall, but later abandoned the plan following more optimistic forecasts from the Office for Budget Responsibility (OBR).
The OBR clarified that it had communicated to Reeves in September that the deficit would be much smaller than initially estimated. By October 31, the OBR informed the Chancellor that the deficit had been eliminated, resulting in a slight surplus.
Despite the OBR’s reassurances, Reeves delivered a speech on November 4 that many interpreted as a preparation for an income tax hike. Subsequently, it was leaked to the Financial Times the following week that she had shelved the idea.
When asked if Reeves misled the public, the Prime Minister’s spokesperson defended her actions, emphasizing that she had transparently addressed the country’s challenges and decisions in the Budget speech.
Tensions between the OBR and the Treasury escalated after the OBR accidentally disclosed key Budget measures before Reeves’ speech, causing confusion. The Treasury abstained from commenting on the OBR’s processes but stressed that the Chancellor’s decisions were centered on reducing living costs, cutting hospital wait times, and managing national debt.
Emphasizing the importance of Budget security, the Treasury expressed the necessity of maintaining confidentiality in Treasury-OBR discussions and welcomed the OBR’s commitment to avoid such breaches in the future.
