Keir Starmer has insisted there was “no misleading” by his chancellor amid claims she lied in the run-up to the Budget, with questions growing over his own future.
The prime minister took the unusual step of coming out fighting with a speech just five days after Rachel Reeves delivered the Budget, as he faced a barrage of questions over whether he authorised her to mislead the public over the true state of the economy.
The row centres on a press conference given by Ms Reeves in November, in which she warned of the state of the public finances and suggested that income tax may have to go up.
It has since emerged that she failed to reveal information from the Office for Budget Responsibility (OBR) that showed tax receipts were much better than expected, ahead of her announcing £26bn worth of tax rises at the Budget.
However, with demands for the chancellor to quit over allegedly misleading the public, the only person to resign was OBR chair Richard Hughes on Monday evening, hours after a damning internal investigation was published into how the organisation inadvertently leaked the Budget details before Ms Reeves delivered her speech in the Commons last Wednesday.
Tory leader Kemi Badenoch said Ms Reeves was using Mr Hughes as a “human shield”, after claiming she had “lied to the public” and should be sacked.
Speaking 24 hours after Ms Reeves denied lying over the state of the public finances before the Budget, Sir Keir was repeatedly forced to come out on the defensive as he gave a speech highlighting the “moral mission” of his government in tackling child poverty.
He 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 £16bn 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”, adding that at one point he thought Labour would have to breach its manifesto, 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.”
As Sir Keir gave his speech at a community centre in the City of London, Ms Reeves travelled to an investment event in Wales, and so avoided being forced to give an explanation of her actions in an emergency statement to the Commons.
Instead her deputy, chief Treasury secretary James Murray was handed the task of trying to patch up the damage to the government’s reputation.
But it came as ministers were openly briefing about how they too had been misled by Sir Keir and Ms Reeves ahead of the Budget.
One minister told The Independent that the aftermath of the Budget was “less than ideal”.
A number of MPs complained about the poor communications strategy that has dogged the government since it was elected last July.
One Labour MP said: “We have to look at whoever is working for Rachel and was given licence to brief out the Budget in the way it happened over months.”
Another asked: “Why didn’t we have a clear message in the run-up to this Budget on child poverty?”
It was noted by some that both Sir Keir and Ms Reeves had opposed getting rid of the two-child benefit cap when they were elected last year, before making it the centrepiece of this Budget after pressure from Labour MPs.
But there was also anger among MPs over ministers claiming they had been “misled”.
One MP said: “People need to keep their heads down. We have just got the two-child benefit cap scrapped, we should be celebrating that and uniting behind it. I’m not sure what ministers are up to.”
There were concerns that allies of health secretary Wes Streeting could be trying to capitalise as a means to launch a coup and oust Sir Keir.
Meanwhile, Ms Badenoch was applauded by business representatives at a question and answer session in London when she claimed Ms Reeves had lied.
Later, she claimed that the chancellor was trying to use the head of the OBR, Mr Hughes, as “a human shield” after he resigned following the watchdog publishing a report that said the leak was the worst failure in its 15-year history.
Mr Hughes, who has served as chair of the OBR since 2020 and was reappointed to the job for a second five-year term in July this year, said he was resigning to allow the OBR to “quickly move on from this regrettable incident”.
In the Commons, shadow chancellor Sir Mel Stride said. “The chancellor’s credibility is in tatters, and to the long list of her failings in respect to these matters should be added that of disrespecting this House.”
There have been calls for an investigation by the Financial Conduct Authority and the government’s ethics adviser Sir Laurie Magnus.
