Downing Street has rejected claims that the chancellor misled the public about the fiscal position ahead of the 26 November Budget. The prime minister’s spokesperson said “I don’t accept that”, after new correspondence from the Office for Budget Responsibility (OBR) set out that, by 31 October, the government was on course to meet its fiscal rules with a pre‑measures headroom of £4.2bn on the current budget.
In a letter to the Commons Treasury Committee, OBR chair Richard Hughes detailed the forecast rounds between September and November. Under the government’s rules, the current budget must be in balance and public sector financial liabilities (PSNFL) must be falling in 2029‑30. Round 1 (3 October) showed the current budget missed by £2.5bn, but the final pre‑measures round submitted on 31 October showed both targets met, with £4.2bn headroom on the current balance and £11.1bn on PSNFL falling. No further changes were made to the pre‑measures forecast after that date.
The OBR’s Economic and Fiscal Outlook explains the mechanics. A 0.3 percentage‑point productivity downgrade reduced the medium‑term outlook, but this was more than offset by higher inflation and stronger nominal earnings, lifting receipts relative to March. The watchdog estimates Budget tax measures will raise around £26bn a year by 2029‑30, more than offsetting higher spending decisions taken since spring.
In the run‑up to the Budget, the chancellor repeatedly warned about weaker productivity and difficult choices. In a 4 November Downing Street speech she said productivity was “weaker than previously thought” with consequences for receipts. On 10 November she told BBC Radio 5 Live that keeping manifesto tax commitments would require “deep cuts in capital spending”.
Income tax rates were ultimately left unchanged on 26 November, but the Budget extended the freeze to personal tax and National Insurance thresholds by three years, to April 2031, alongside other revenue measures. The OBR attributes the largest medium‑term yield to the threshold freeze and other personal tax changes, contributing to the £26bn total in 2029‑30.
Opposition leaders escalated their criticism following the OBR letters. Conservative leader Kemi Badenoch said Rachel Reeves had “lied to the public” and called for her to be sacked. The shadow chancellor, Sir Mel Stride, described the pre‑Budget messaging as a “smokescreen” and argued the government chose to raise taxes to fund higher welfare spending. No 10 rejected that characterisation.
For households and employers, the extended threshold freeze implies continued fiscal drag over the forecast horizon. The OBR expects around 780,000 more basic‑rate taxpayers, 920,000 more higher‑rate taxpayers and 4,000 more additional‑rate taxpayers by 2029‑30 than in its March forecast, with the freeze raising about £8bn in that year.
Parliament’s Treasury Committee has published the OBR correspondence and scheduled a session with Richard Hughes and colleagues on Tuesday at 10:00 to examine the forecast process and the inadvertent early release of the November EFO. The OBR has separately written to apologise for that publication error.