Chancellor Rachel Reeves rejected allegations on Sunday that she misled the public over the state of the public finances ahead of the 26 November Budget, saying her pre‑Budget remarks reflected the choices she faced under the fiscal rules. Appearing on broadcast programmes, she argued she had been clear about the trade‑offs, while Conservative leader Kemi Badenoch renewed her call for the Chancellor to resign. Downing Street dismissed the charge that the public or markets were misled.
The dispute centres on what Reeves said in a 4 November Downing Street address about a downgrade to productivity and what the Office for Budget Responsibility had already told the Treasury. Correspondence released by Parliament shows the OBR advised ministers on 17 September that higher wages and inflation would offset much of the productivity hit; by 31 October its final pre‑measures round showed around £4.2bn of headroom against the Chancellor’s current‑budget rule for 2029/30.
Reeves’ defence is that £4.2bn would have been unusually small by historical standards and left the Budget exposed to shocks. The OBR’s Economic and fiscal outlook, accidentally made accessible before the speech began, later showed headroom near £21.7bn after policy measures, reflecting a package that front‑loads spending and back‑loads tax rises. Reeves framed this as rebuilding resilience under the rules.
Opposition parties say the Chancellor painted too bleak a picture to justify tax increases. Badenoch alleged Reeves had given a distorted impression and called for her resignation. Separately, Conservative shadow chancellor Mel Stride and SNP Westminster leader Stephen Flynn have written to the Financial Conduct Authority urging an inquiry into whether pre‑Budget briefings or public statements constituted potential market abuse. The FCA has declined to comment.
The Prime Minister’s office has rejected accusations of dishonesty and is preparing to reinforce support for the Budget’s choices. Reporting indicates Sir Keir Starmer will use a speech on Monday to back the Chancellor’s approach and set out next steps on growth and infrastructure.
Policy content is central to the row. The Budget extended the freeze on income tax thresholds to 2031, increased a range of taxes that together raise roughly £26bn by 2029/30, and abolished the two‑child limit in working‑age benefits from April 2026. The OBR attributes around £8bn in 2029/30 to the threshold freeze, and the welfare change is estimated to reduce child poverty by about 450,000 by the end of the forecast period.
Funding explanations have focused on tax policy and compliance. Reeves confirmed higher online gambling duties, with Remote Gaming Duty rising and online betting duty moving up over time. The Treasury expects gambling tax reforms to raise just over £1bn annually by the early 2030s, alongside measures on avoidance and evasion. Ministers say these decisions supported the welfare changes without breaching headline rate pledges.
Understanding the technical terms matters. “Headroom” is the OBR’s estimate of the margin by which the Chancellor meets self‑imposed fiscal rules-principally balancing the current budget in 2029/30 and having net financial debt falling at the end of the forecast. The Commons Library notes that headroom of £9.9bn at the previous fiscal event was already small by recent standards, helping explain why a pre‑measures figure near £4bn was judged inadequate by the Treasury.
The process that generated this controversy is documented. In letters published by the Treasury Committee, OBR Chair Richard Hughes set out how successive forecast rounds evolved from September to late October, and separately apologised for the inadvertent early access to its November outlook on Budget day. The Committee will take evidence from the OBR this week.
For households and firms, the immediate effects are practical rather than rhetorical. Freezing thresholds increases the number of people paying tax at higher rates as earnings rise, while changes to gambling duties will be felt across remote gaming and online betting operators. Ending the two‑child limit increases support for larger low‑income families. The Government argues the overall package strengthens fiscal credibility; opponents argue it raises the tax burden while communications overstated the pre‑Budget risk.