Starmer says there was ‘no misleading’ by Chancellor ahead of Budget

Sir Keir Starmer has insisted that there was “no misleading” by Chancellor Rachel Reeves over the state of the public finances ahead of the Budget.

Ms Reeves has faced claims she misled voters by overstating the scale of the fiscal challenge in the run-up to last week’s Budget, in which she announced £26 billion worth of tax rises.

She has also reportedly been accused of misleading the Cabinet.

The Chancellor has said an Office for Budget Responsibility (OBR) forecast showing a £4.2 billion surplus against her borrowing rules did not take into account the welfare reform U-turn or the abolition of the two-child benefit cap.

The Prime Minister said: “There was no misleading, and I simply don’t accept, and I was receiving the numbers, that being told that the OBR productivity review means you’ve got £16 billion less than you would otherwise have had shows that you’ve got an easy starting point.

“Yes, of course, all the other figures have to be taken into account.

“But we started the process with significantly less than we would otherwise have had.

He said there was “no pretending” that it was a “good starting point”.

At one point he thought Labour would have to breach its manifesto, he said, in an apparent reference to scrapped plans to raise the basic rate of income tax.

He added: “There was a point at which we did think we would have to breach the manifesto in order to achieve what we wanted to achieve.

“Later on, it became possible to do it without the manifesto breach.

“Given the choice between the two, I didn’t want to breach the manifesto, and that’s why we came to the decisions that we did.”

The Chancellor meanwhile rejected a report in The Times from an unnamed minister who claimed the Cabinet was “at no point” told about the “reality” of the OBR forecasts.

“You would never expect the Prime Minister and Chancellor to go through all the detailed numbers.

“The Cabinet are briefed on the morning of the Budget on the Budget numbers,” she told BBC Wales at the Wales Investment Summit.

She added: “Of course, we go through things that affect individual government departments, but the whole information of the Budget is not supposed to be provided until the Chancellor delivers the Budget.

“Obviously, this time, it was leaked early, but not by the Treasury.”

The OBR is due to publish a report on Monday afternoon into how it published its analysis of the Budget early, revealing key details of the Chancellor’s statement before she had delivered it.

Sir Keir said the early disclosure of market sensitive information was a “massive discourtesy” to Parliament and a “serious error” but praised the watchdog itself as “vital and integral to our fiscal rules”.

He called the Budget a moment of “personal pride” and pointed to the choice to lift the two-child benefit cap.

He also signalled a fresh push on welfare reform in the Monday morning speech, but sidestepped questions about committing to reducing the benefits bill and what action he would take if Labour MPs sought to block changes.

He said reforms were not about looking “politically tough”, but rather aimed to reverse low productivity and “remove all the barriers which hold back the potential of our young people”.

Sir Keir was forced to abandon welfare cuts planned earlier this year in the face of a major backbench rebellion.

Asked on Monday if would remove the whip from opponents to new welfare reforms, he said he thought there was a “general consensus there is a moral mission” to reform welfare.

“I mean, there aren’t many people who are comfortable with nor should they be the fact there’s nearly a million young people who are … stuck with not earning and not learning.”

He acknowledged the welfare bill has risen “extraordinarily” but failed to explicitly say that he planned to bring it down by the next election, saying that two reviews need to “complete their course”.

One led by former Labour health secretary Alan Milburn into “Neets”, 16-24-year-olds who are not in education, employment or training, is expected to report next summer.

Another led by Sir Stephen Timms is examining health and disability benefits.

Sir Keir’s summer U-turn saw changes to personal independence payment (Pip) eligibility stripped out of the Government’s welfare legislation, amid warnings from rebel MPs of the impact on disabled claimants.

The climbdown blew a hole of £4.8 billion in the Chancellor’s preparations for the Budget, removing expected savings.

Chief Secretary to the Prime Minister Darren Jones earlier insisted there was a “funding gap” to fill when asked when he knew that there was no “black hole” in the public finances.

Cabinet minister Mr Jones told BBC Radio 4’s Today programme: “There are two things relevant here.

“The OBR did downgrade its assumptions about how much money was coming in over future years by looking at the past 10 years.

“That is true and correct.

“And as I say, there was a funding gap.”

Mr Jones told LBC that Ms Reeves had the “full support” of Cabinet ministers on the Budget and that they are briefed on the “context” in the run-up and then briefed in Cabinet on the morning of the statement.

He later added: “The Chancellor didn’t mislead anyone.”

The Conservatives on Sunday wrote to Sir Keir demanding the Chancellor come before MPs on Monday to “explain the extent to which she misled the public”.

The Tories and the Scottish National Party have asked the Financial Conduct Authority to investigate policy leaks ahead of the Budget and the Chancellor’s own comments.

Reform UK leader Nigel Farage has urged the Prime Minister’s independent standards adviser Sir Laurie Magnus to look into potential breaches of the ministerial code.