Reeves refutes accusations of misleading public about UK's finances before Budget

Chancellor Rachel Reeves has insisted she is reliable in managing the nation's finances and has been transparent about the reasoning behind her choices, responding to accusations that she misled the public ahead of her Budget.

During an interview on BBC One's Sunday with Laura Kuenssberg, Reeves faced questions about her repeated warnings regarding a downgrade in the UK's economic productivity forecasts. It later emerged that the Office for Budget Responsibility (OBR) informed her in mid-September that the public finances were stronger than initially believed.

Reeves rejected claims that she misled the public, stating that she had consistently been upfront about her plans, both in the past week and during the run-up to the general election.

Conservative leader Kemi Badenoch, who also appeared on the programme, expressed dissatisfaction with Reeves' response and called for her resignation. The Conservatives have accused Reeves of presenting an unnecessarily bleak view of public finances as a "smokescreen" to justify tax increases, with Badenoch asserting that the chancellor "lied to the public".

Downing Street has denied any misleading statements, and Prime Minister Keir Starmer is set to defend Reeves' budget choices in a Monday speech, emphasizing that the measures aim to ease cost of living pressures and reduce inflation.

In the interview, Kuenssberg asked if Reeves could be trusted, to which she responded affirmatively. The chancellor explained that her November 4 announcement regarding reduced cash due to a productivity downgrade was accurate. She emphasized that the OBR's spring figures of 9.9bn had fallen to 4.2bn by autumn, limiting the scope for the Budget. Reeves said this would have produced the "lowest surplus any chancellor ever delivered," justifying her steps to raise the surplus to 21.7bn.

Addressing claims that she overstated the financial situation to enable a 16bn welfare increase, Reeves said she considered prior policy changes, including welfare and the Winter Fuel Allowance. She confirmed that the Budget funded the removal of the two-child benefit cap through measures such as higher online gambling taxes and anti-tax avoidance actions, benefiting half a million children.

Regarding the freezing of income tax thresholds, Reeves acknowledged that this was not in her manifesto, but cited the productivity downgrade and global financial instability as necessary reasons for her actions. She highlighted the risk of losing control over public finances, which could have resulted in higher interest rates affecting both businesses and households.

Badenoch rejected Reeves' explanations, arguing that welfare spending should have been cut instead, and reiterated her call for the chancellor's resignation. She accused Reeves of raising taxes unfairly to fund welfare and criticized the approach as harmful to hard-working families. Additionally, Badenoch mentioned that shadow chancellor Mel Stride has requested an investigation from the Financial Conduct Authority, alleging that the Budget announcements may constitute market manipulation.

Author: Sophia Brooks