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Sir Keir Starmer has responded to accusations that his chancellor, Rachel Reeves, misled the public about the country’s financial position ahead of last week’s Budget announcement. Members of the Conservative party criticized Reeves, suggesting her portrayal of the nation’s finances was overly negative, creating a “smokescreen” to justify tax increases. Kemi Badenoch went further, alleging Reeves “lied to the public.” Despite these claims, Starmer maintained there was no deception involved, explaining that downgraded economic productivity forecasts reduced the government’s available funds by £16 billion. He expressed pride in the Budget, citing its focus on reducing child poverty and addressing the high cost of living.
Meanwhile, the head of the Office for Budget Responsibility (OBR), the independent body responsible for scrutinizing government finances, resigned following the premature release of the Budget’s analysis. Richard Hughes acknowledged this as “a technical but serious error,” taking full responsibility for the incident after an investigation found faults in the handling of classified information. The early publication revealed sensitive market forecasts nearly an hour before the chancellor’s official statement.
In the lead-up to the Budget on 26 November, Rachel Reeves had strongly hinted at potential income tax increases, which raised questions about a possible breach of Labour’s manifesto promise not to raise those taxes. Reeves declined to rule out such rises, citing projected slower productivity growth. During a rare Downing Street press conference, she warned that weaker productivity would negatively affect tax revenues, statements widely viewed as preparing the public for tax hikes. However, prior to this event, the OBR had informed the Treasury that although productivity forecasts were downgraded, higher wages would counterbalance this by increasing tax receipts. It was only after the Financial Times reported on 13 November that income tax rates would remain unchanged that government sources clarified these better-than-expected wage forecasts were behind the decision. The final Budget contained £26 billion in tax increases, including an £8 billion extension of the freeze on income tax and National Insurance thresholds for three more years, but did not involve raising income tax rates.
After his speech, Starmer faced questions from the BBC political editor, Chris Mason, on whether Reeves’s earlier comments had intentionally misled the public. Starmer pointed out the fiscal challenges posed by the downgraded productivity forecast but emphasized the government’s commitment to safeguarding the NHS, reducing borrowing costs, and tackling living expenses. He defended the tax rises as unavoidable under these circumstances, saying, “Against that backdrop it was inevitable that we would always have to raise revenue. So there’s no misleading there.” Starmer also revealed for the first time that there was a moment when the government considered breaking its manifesto pledge on tax but decided against it as the fiscal situation improved. He explained, “I didn’t want to breach the manifesto, and that’s why we came to the decisions that we did.”
Conservatives demanded accountability, with Badenoch calling for Reeves’s resignation, arguing that the uncertainty caused by her statements led to significant consequences for citizens who made irreversible financial decisions, such as pension withdrawals and mortgage fixes, based on the expectation of tax increases. Though she stopped short of demanding the prime minister’s resignation, Badenoch said that if he was involved in the misleading briefings, “he has questions to answer.” Nigel Farage, leader of Reform UK, claimed Reeves had deliberately misled the public and stated, “The wrong person has resigned today, it should have been Rachel Reeves.”
Starmer defended the Budget as a series of necessary and fair decisions, acknowledging that tax rises can increase hardship but asserting that alternatives—such as cuts to public services, ignoring child poverty, or borrowing more—were unacceptable. Describing the Budget as “a moment of personal pride,” he highlighted the removal of the two-child benefit cap, which is expected to lift hundreds of thousands of children out of poverty. The prime minister also promised welfare reform to address systemic issues that he said trap people in poverty and stigmatize young people as unfit for work. While he did not provide detailed plans, he emphasized the importance of ongoing reviews focused on young people not in education or employment and on health and disability benefits. He assured that despite the Office for Budget Responsibility’s forecast that none of the Budget’s measures would accelerate economic growth in the next five years, he was “confident we can beat the forecasts.” Starmer pledged to cut “unnecessary red-tape” to stimulate building projects and acknowledged the economic harm caused by the Brexit deal, promising to strive for a closer relationship with the EU. However, the Liberal Democrat leader criticized Starmer for refusing to consider rejoining a customs union with the EU, describing it as the most effective way to boost growth
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