Sir Keir Starmer has expressed his support for the upcoming Budget while urging the Government to accelerate efforts to stimulate economic growth. This endorsement comes amid allegations that Rachel Reeves, the Shadow Chancellor, misled the public regarding the fiscal challenges facing the country. In response, Downing Street has categorically dismissed these claims as “untrue.”
The controversy centers around Reeves‘ recent statements, particularly her remarks during a speech on November 4, 2023, where she suggested that an estimated £20 billion gap existed in meeting fiscal rules. This assertion was based on concerns about declining productivity forecasts. However, the Office for Budget Responsibility (OBR) revealed on a subsequent Friday that it had informed the Chancellor as early as September 17 that an improved tax revenue outlook—thanks to rising wages and inflation—indicated that the shortfall was, in fact, smaller than anticipated. By October, the OBR had communicated that this gap had been eliminated entirely.
In light of the OBR’s disclosure, opposition figures have called for the Financial Conduct Authority (FCA) to investigate whether the Treasury misled the public regarding the economic situation. A No 10 source defended Reeves, stating, “No 10 was aware of the content of the speech, which we believe accurately outlined the need to raise revenues.” They further emphasized that the OBR figures supported the necessity for significant revenue generation to meet financial commitments and create fiscal headroom.
In a bid to shift the focus back to policy, Starmer plans to use his speech on Monday to endorse the decisions made by Reeves in the Budget and articulate his long-term growth strategy. He is expected to commend the Budget for addressing the cost of living, ensuring economic stability, and maintaining a commitment to fiscal rules while safeguarding public services and investment.
The Labour leader will highlight that “economic growth is beating the forecasts,” yet he insists that the Government needs to act “further and faster” to bolster this growth. He will also reaffirm plans to reform the construction of nuclear power plants, following findings from the Government’s nuclear regulatory taskforce that indicated excessive regulation had made the UK the costliest place to build such facilities.
Business Secretary Peter Kyle will be assigned to apply similar deregulatory measures to major infrastructure projects and expedite the implementation of Labour’s industrial strategy.
On Sunday, Reeves is expected to face intense questioning regarding her pre-Budget statements during various news programs. She will likely emphasize the Government’s record investment of £7.3 billion in local road maintenance, aimed at alleviating issues such as potholes that affect councils nationwide.
In a related development, Conservative shadow chancellor Sir Mel Stride has reportedly written to the FCA, urging it to investigate “possible market abuse” stemming from what he describes as “misleading” comments made by Reeves. Additionally, Stephen Flynn, leader of the Scottish National Party in Westminster, has called for an immediate inquiry into the claims of misleading Budget briefings, questioning whether Reeves‘ speech constituted “market manipulation.”
In response to these developments, a Treasury spokesperson stated, “We are not going to get into the OBR’s processes or speculate on how that relates to the internal decision-making in the build-up to a Budget.” They emphasized that the Chancellor made choices aimed at reducing the cost of living, shortening hospital waiting lists, and increasing fiscal headroom to manage public debt.
As the political landscape evolves, all eyes will remain on the forthcoming Budget and its implications for the UK economy.
