Keir Starmer is scrambling to defend his Chancellor, Rachel Reeves, amid growing outrage over the recent Budget.
Today, the Prime Minister will hold a press conference, urging Labour MPs to stay loyal to his “long-term plan” after a weekend of fierce criticism targeting Reeves.
The crisis revolves around claims that Reeves exaggerated a so-called “black hole” in the public finances to justify sweeping tax hikes, even though Starmer knew for months that the Office for Budget Responsibility (OBR) had not identified any such deficit.
Cabinet in the Dark and Probes Looming
Even some ministers are reportedly furious at being kept uninformed about the real state of the nation’s finances.
Meanwhile, Reeves faces dual investigations—one from No10’s standards watchdog and another from the Financial Conduct Authority over potential market missteps.
In an effort to deflect criticism that her huge tax increases are being funneled into benefits, Starmer plans to announce a new clampdown on welfare.
He may also hint at a politically strategic move on Brexit to appease restless MPs.
Chancellor and Prime Minister Intertwined
Observers note that Starmer and Reeves’ fates are deeply connected; questions are mounting over whether either can maintain credibility in office.
Last night, Reeves told Channel 4 News that she saw no need for an investigation into whether she misled markets or the public.
Touring studios, she repeatedly claimed that Starmer was fully aware of her actions.
Reeves defended her Budget decisions by blaming the OBR’s downgrades, despite the watchdog privately informing her months earlier that there was no structural black hole.
She insisted her warnings about the finances were not lies, framing them instead as necessary measures to prevent market panic.
The Budget Black Hole That Wasn’t
In the weeks leading up to the fiscal announcement, Reeves repeatedly warned of a catastrophic deficit.
Yet internal OBR forecasts, dating back to September, indicated that productivity slowdowns were offset by stronger-than-expected tax revenues.
By late October, projections were actually showing a small surplus.
The only reason for her large tax increases, it seems, was Labour’s political choice to expand benefits.
When pressed on Sky News, Reeves pointed to a “big downgrade in productivity” as her justification, claiming it had a “big impact” and that asking the public to contribute more was necessary.
Conflicting Messages and Public Doubt
Despite knowing she was running a surplus, Reeves gave a dramatic breakfast-time speech portraying the public finances as dire.
When pressed by presenter Trevor Phillips on whether she had lied, she initially dodged the question, then insisted, “Of course I didn’t.”
Even some of her Cabinet colleagues feel misled.
A senior minister told The Times that the true OBR forecasts were never shared with the rest of the Cabinet, leaving many in the dark.
Farage and the Tories Sound the Alarm
Nigel Farage has written to Sir Laurie Magnus, the Prime Minister’s ministerial standards adviser, warning that the public faces “the heaviest tax burden in generations” based on a misrepresentation of the finances.
Farage claims that Reeves ran a “sustained public and media campaign” portraying the books as being in collapse to justify a £30 billion tax increase.
Tory leaders, including Kemi Badenoch, have joined calls for Reeves’ resignation.
They argue that her emergency press conference painted a disastrous picture while OBR data showed the opposite.
Possible Ministerial Code Breaches
If the allegations are upheld, Reeves could be in breach of the Ministerial Code, which requires truthful and transparent communication with Parliament and the public.
Tory MPs also warn she may have violated financial regulations, potentially affecting markets with “briefings, leaks, and spin” from HM Treasury.
Shadow Chancellor Alex Burghart told Starmer that these actions compromise the integrity of the fiscal process, Parliament, and, most importantly, the lives of working people.
A Leadership Under Scrutiny
As the fury grows, Starmer’s attempts to shield Reeves may not be enough.
The intertwined reputations of the Prime Minister and Chancellor are under unprecedented pressure, leaving Labour’s leadership facing one of its most severe credibility tests in recent memory.
The coming days will determine whether Starmer and Reeves can weather this storm—or whether the Budget crisis becomes the defining political crisis of their tenure.
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