Downing Street refutes allegations that Chancellor Rachel Reeves provided misleading information to the public and financial markets regarding the magnitude of the deficit in public finances. Earlier this month, Reeves hinted at the possibility of raising income tax in the Budget to cover an estimated £20 billion shortfall. However, she later decided against this course of action, citing more optimistic forecasts from the Office for Budget Responsibility (OBR).
The OBR disclosed in a recent letter that they had informed Reeves in September that the deficit was significantly smaller than initially projected. By October 31, the OBR informed the Chancellor that the deficit had been eliminated, resulting in a slight surplus. Despite this, Reeves delivered a speech on November 4 that many interpreted as laying groundwork for a potential income tax hike.
When questioned about whether she misled the public, the Prime Minister’s spokesperson defended Reeves, emphasizing the transparency of her decisions during the Budget announcement. Tensions between the OBR and the Treasury have escalated, highlighted by an incident where the OBR inadvertently released Budget measures before Reeves’ speech.
A Treasury representative stated that they would not comment on the OBR’s internal procedures but stressed the Chancellor’s dedication to reducing living costs, hospital wait times, and national debt expenses. The Treasury emphasized the importance of maintaining confidentiality in Treasury-OBR discussions, noting that the OBR had confirmed that such premature disclosures would not become a regular occurrence.