Nigel Farage has called for an inquiry into Rachel Reeves’s pre-budget claims to assess if the Chancellor misled the public over the nation’s finances. The Reform UK leader urged the Prime Minister’s independent standards adviser to look into potential breaches of the ministerial code after the Chancellor’s claims in the lead up to the budget about the nation’s productivity.
The ministerial code demands ministers “give accurate and truthful information to Parliament” and are “as open as possible with Parliament and the public”. In his letter to Sir Laurie Magnus, Mr Farage accused Ms Reeves of “a sustained and deliberate narrative advanced across multiple platforms, after the OBR forecasts were known to the Treasury, and in circumstances where the existence of fiscal headroom was not being disclosed to Parliament or to the public”.
Pre-Budget speculation had suggested Ms Reeves faced a significant gap in her spending plans, partly due to a downgrade to productivity forecasts expected to be delivered by the Office for Budget Responsibility (OBR).
The Chancellor herself fed that speculation in a speech in Downing Street on November 4 when she said weaker productivity had “consequences for the public finances” in the form of “lower tax receipts”.
Mr Farage said: “First, it has been widely reported that, weeks before the Budget, the Office for Budget Responsibility informed the Chancellor that, on unchanged policy, she was on course to meet her fiscal rules with headroom of at least £4billion, and never less than £1.5bn.
“Secondly, notwithstanding that information, the Chancellor conducted a sustained public and media campaign portraying the public finances as being in a state of collapse in order to prepare political ground for approximately £30bn of tax increases which, on the OBR’s own numbers, were discretionary policy choices rather than unavoidable fiscal necessity.”
Opposition politicians, have claimed this was “misleading” as the OBR had already provided her with a forecast showing the situation was not as bad as feared.
Conservative Party leader Kemi Badenoch told the BBC that Ms Reeves should resign over her comments, claiming that “she was raising taxes to pay for welfare.”
While the OBR did deliver a productivity downgrade that wiped £16bn off expected tax receipts, much of that was cancelled out by inflation and higher wage growth, leaving a £4.2bn surplus against Ms Reeves’s borrowing rules.
But on Sunday, she pointed out this would have been the lowest headroom any chancellor had secured against their fiscal rules.
It also did not take into account decisions such as the U-turn on cutting winter fuel payments or welfare reform, or the abolition of the two-child benefit cap, expected to add £3.1bn to public expenditure by the end of the decade.
She told Sky News: “If I was on this programme today and I said I’ve got a £4.2bn surplus, you would have said, and rightly so, ‘that is not enough, Chancellor’.”
The Chancellor added: “In the context of a downgrade in our productivity, which cost £16bn, I needed to increase taxes, and I was honest and frank about that in the speech that I gave at beginning of November.”
Ms Reeves also pointed out that, without the productivity downgrade, she would have had £20bn of headroom, excluding the money needed to pay for decisions on welfare.
