No 10 denies Reeves misled public in run-up to Budget

"Downing Street has denied Chancellor Rachel Reeves misled the public about the state of the public finances in the run-up to this week's Budget. There were warnings ahead of the Budget that Reeves could face as much as a 20bn gap in meeting her rule of not borrowing for day-to-day spending. But in a letter to MPs, the chairman of the Office for Budget Responsibility (OBR) said he had told the chancellor in mid-September the gap would be much smaller."

"Conservative leader Kemi Badenoch said the letter showed Reeves had "lied to the public" and should be sacked. The weeks leading up to the Budget were dominated by speculation the chancellor would increase the rates of income tax, breaking a Labour manifesto pledge. On 4 November, Reeves used a rare pre-Budget speech in Downing Street to warn the UK's productivity was weaker "than previously thought" and that "has consequences for the public finances too, in lower tax receipts.""

"However, the Office for Budget Responsibility has now confirmed that before both of these interventions, it had told Reeves the government had in fact received higher than expected tax receipts, which offset the impact of the productivity downgrade. That meant she had a surplus to meet both of her fiscal rules. In a letter to the Commons Treasury select committee, OBR chairman Richard Hughes revealed that he told the chancellor on 17 September that the public finances were in better shape than widely thought."

Downing Street denied that Chancellor Rachel Reeves misled the public about the state of the public finances ahead of the Budget. Warnings suggested a possible £20bn shortfall in meeting her rule against borrowing for day-to-day spending. The OBR informed the chancellor in mid-September that the gap would be much smaller, and later confirmed higher-than-expected tax receipts offset a productivity downgrade, producing a surplus to meet both fiscal rules. OBR chairman Richard Hughes told MPs he had informed the chancellor on 17 September and told the Treasury on 31 October that the government was on course to meet the fiscal rules. Conservative leader Kemi Badenoch demanded action.

Read at www.bbc.com