SIR Keir Starmer and Rachel Reeves face accusations of misleading the Cabinet regarding tax increases proposed in their recently announced Benefits Street Budget, reports BritPanorama.
Cabinet ministers have asserted they were not informed that the Office for Budget Responsibility (OBR) had privately confirmed a £4.2 billion surplus to the Chancellor. This revelation has heightened criticism of the government’s handling of budgetary decisions, particularly the tax implications on the workforce.
Furthermore, it has been claimed that Reeves consistently emphasized a downgrade in productivity forecasts during meetings as justification for raising taxes. A senior minister noted, “At no point were we told about the reality of the OBR forecasts.” This lack of communication has led to concerns about transparency in the Cabinet’s fiscal planning.
The minister added, “Had we been told, we might have been in a position to advise against setting hares running on income tax and giving the public the impression we are casual about our manifesto commitments.” Many now view the budget as poorly handled from inception to execution.
Bruising interviews
In the wake of increasing pressure on Reeves to resign, Starmer has made an emergency commitment to reduce welfare spending. He plans to articulate this pivot in an upcoming speech, arguing the benefits system currently acts as a barrier to young people entering the workforce.
Despite this shift in narrative, it has drawn backlash due to tax hikes that burden workers while simultaneously directing additional funds toward welfare. The Chancellor’s assertion that the tax increases were necessary to address a significant budget deficit has been called into question.
Nigel Farage, leader of Reform UK, has urged for an investigation into whether Reeves breached the ministerial code, which mandates ministers to provide accurate and truthful information to Parliament and the public.
Farage accused Reeves of promoting a misleading narrative regarding the financial state of the country post-OBR briefing. He stated, “It is laughable to hear him say Rachel Reeves’ Benefits Street Budget has put the country on the right course,” referring to the perceived misrepresentation of fiscal realities to justify tax increases.
Following the budget, nearly one million additional individuals are projected to fall into higher income tax brackets due to Labour’s decision to freeze thresholds. Labour’s measure has also significantly increased welfare costs by eliminating the two-child benefit cap.
Polling data indicates a key dissatisfaction among the public, with 95% of respondents believing Labour has adversely affected the economy and 97% calling for Reeves’ resignation. In a series of difficult interviews, Reeves defended her budget decisions, claiming the need for repairs to public finances remains vital.
“Anyone who thinks that there was no repair job to be done on the public finances, I just don’t accept that,” she stated during one interview, maintaining that the Budget was necessary for establishing more economic resilience and “headroom.”
The Chancellor faced scrutiny during a BBC interview where she notably avoided eye contact after being accused of dishonesty regarding the budget implications.
On Sky, Reeves justified her tax increases by pointing to a £16 billion productivity downgrade. She asserted, “I was honest and frank about that in the speech I gave in November.”
With growing calls for accountability, Conservative MPs have demanded that Reeves provide an explanation in Parliament, suggesting her statements regarding a nonexistent fiscal gap may warrant referral to regulatory authorities.
Meanwhile, Starmer is expected to frame his welfare adjustments in relation to broader economic strategies aimed at easing the ongoing cost-of-living crisis, promoting reduced energy costs and the freezing of rail fares.
Despite these initiatives, critical voices remain. Shadow Chancellor Sir Mel Stride remarked, “It is laughable to hear him say Reeves’ Benefits Street Budget has put the country on the right course.” He criticized the substantial tax increases as detrimental to hardworking individuals, highlighting a discrepancy between policy objectives and public perception.
Firms even gloomier
Senior business leaders are expressing heightened concerns regarding the UK’s economic outlook, with confidence levels reportedly at a historic low following the Budget announcement.
The Institute of Directors highlighted that 80% of business leaders view the Budget negatively, and expectations for future hiring have significantly declined.
Andrew Griffith, Shadow Business Secretary, noted that the Budget failed to provide necessary reassurances to businesses, as economic optimism has dwindled amidst fears of reduced revenues.
The ongoing turmoil within Labour’s leadership, compounded by the critical public sentiment surrounding the Budget, signals a challenging landscape for the party as it navigates both internal discontent and external scrutiny in the months ahead.
