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Chancellor Rachel Reeves has firmly rejected accusations that she misled the public regarding the state of the UK’s finances before the recent Budget. Speaking in an interview on BBC One’s Sunday with Laura Kuenssberg, Reeves insisted she has been transparent about the rationale behind her financial decisions. The controversy arose after reports emerged that the Office for Budget Responsibility (OBR) had informed her in mid-September that the public finances were in better condition than previously believed, contradicting her warnings of a downgrade in the UK’s economic productivity forecasts.
Reeves maintained that her statements were not misleading, emphasizing that she remained upfront about her financial plans both before the general election and in the days leading up to the Budget. She illustrated that the headroom—the financial margin available for government spending—had actually been downgraded from £9.9 billion in the spring to £4.2 billion in the autumn, not an additional £4 billion as some critics suggested. She explained that delivering a Budget with only £4.2 billion headroom would have been “the lowest surplus any chancellor ever delivered,” which would have rightly drawn significant criticism. Reeves defended her decision to build financial resilience, increasing the headroom ultimately to £21.7 billion.
Challenged on whether she had overstated the economic situation to justify a £16 billion increase in welfare spending, Reeves pointed out that recent policy changes, such as adjustments to welfare and the Winter Fuel Allowance, needed to be accounted for. She said, “I did say when those policies changed just before the summer that we would have to find that money in the Budget, so I was very upfront about that.” The Chancellor highlighted that scrapping the two-child benefit limit was funded by increased taxes on online gambling and measures to combat tax avoidance and evasion, targeting the reduction of child poverty.
The opposition was not convinced by Reeves’ explanations. Conservative leader Kemi Badenoch, who also appeared on the program, accused her of having “lied to the public” and called for her resignation. Badenoch claimed the Chancellor had painted an unnecessarily bleak picture of the public finances as a “smokescreen” to facilitate tax increases. She added that the only unfunded element was the welfare spending, which bore heavily on hardworking citizens facing financial pressure. Badenoch’s criticism extended to calling on the Financial Conduct Authority to investigate the Chancellor for alleged “market manipulation,” following a complaint from the Conservative shadow chancellor Mel Stride regarding Reeves’ Budget announcements. Meanwhile, Downing Street denied any intention to mislead, with Prime Minister Keir Starmer expected to publicly support Reeves’ decisions as necessary measures to address inflation and ease cost of living pressures
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