Sir Keir Starmer has expressed his support for the Budget while emphasizing the need for the Government to act “further and faster” to stimulate economic growth. This statement comes as Downing Street has dismissed allegations that Shadow Chancellor Rachel Reeves misled the public regarding the fiscal challenges facing the country. The controversy centers around claims that Reeves had suggested a potential £20 billion shortfall in meeting fiscal rules, a narrative that has gained traction as she addressed the nation on November 4, 2023.
Downing Street reacted sharply to the allegations, calling them “categorically untrue.” The Chancellor is expected to face intense scrutiny during Sunday’s media appearances regarding her public statements about the state of the economy. These discussions have been fueled by Reeves’s assertion that tax increases may be necessary due to poor productivity growth—an assertion that critics argue has created unnecessary alarm.
The Office for Budget Responsibility (OBR) reported on Friday that it had informed the Chancellor as early as September 17 that an improved tax revenue from rising wages and inflation indicated the fiscal shortfall was likely smaller than anticipated. By October, the OBR clarified that the shortfall had been eliminated entirely, prompting calls from opposition figures for an investigation by the Financial Conduct Authority (FCA) into whether the Treasury misled the public regarding economic conditions.
A source from Downing Street defended Reeves, stating that No 10 was aware of the contents of her speech and believed it accurately reflected the need for revenue increases. The source maintained that the OBR’s figures, which indicated a need for significant revenue-raising, were aligned with the productivity downgrade mentioned.
In the wake of the controversy, Starmer plans to use a forthcoming speech to highlight his support for Reeves’s decisions outlined in the Budget. He expects to commend the Budget for addressing the cost of living, ensuring economic stability through greater headroom, and committing to fiscal rules that protect investments and public services. Starmer will assert that “economic growth is beating the forecasts,” yet reiterate the Government’s responsibility to enhance this growth trajectory.
The Labour leader will also announce reforms aimed at improving the construction of nuclear power plants. Following a review from the Government’s nuclear regulatory taskforce, which highlighted that excessive regulations have rendered the UK the most expensive country for nuclear power construction, Starmer will emphasize the urgent necessity for regulatory corrections. Business Secretary Peter Kyle has been assigned to implement similar deregulatory strategies to expedite major infrastructure projects, aligning with Labour’s broader industrial strategy.
On the media front, Reeves is anticipated to face tough questioning regarding her pre-Budget statements during Sunday morning news shows. She is also expected to promote the Government’s record investment of £7.3 billion in local road maintenance, aimed at assisting councils in addressing pothole repairs.
In response to the escalating scrutiny, Conservative shadow chancellor Sir Mel Stride has reportedly urged the FCA to investigate potential market abuses stemming from “misleading” comments made by Reeves and the premature disclosure of sensitive Budget details. Stephen Flynn, the leader of the Scottish National Party in Westminster, has echoed these calls, demanding an immediate inquiry into accusations of misleading Budget briefings that could be construed as market manipulation.
A Treasury spokesperson emphasized that it would not speculate on the OBR’s processes or how they relate to internal decision-making. They reiterated that the Chancellor made her choices to alleviate the cost of living, reduce hospital waiting times, and enhance fiscal headroom to manage national debt effectively.
As the debate continues, the implications of these controversies on economic policy and public trust remain to be seen.
