Rachel Reeves has denied lying to the public in the buildup to last week’s budget, insisting that she needed to raise taxes to a record level to ensure economic stability.
The chancellor said on Sunday she had announced £26bn-worth of tax rises on Wednesday in part to build a buffer against her fiscal rules and reduce the risk of further tax increases in the future, and in part to protect public spending.
Her messaging contrasted, however, with what she said before the budget, when she said tax rises would be necessary because of an expected decision by economic forecasters to reduce their growth expectations.
In the end, the Office for Budget Responsibility (OBR) did downgrade its expectations for economic productivity, but said unexpectedly strong wage growth and tax receipts would more than make up for that.
The OBR’s comments have kickstarted a political firestorm, which has led opposition politicians to demand Reeves’s resignation. Keir Starmer is expected to defend the chancellor in a speech on Monday, during which he will also announce new measures to boost economic growth.
On Sunday, Reeves told the BBC’s Laura Kuenssberg: “I wanted to build up the fiscal, economic resilience. The headroom that I had in the spring statement of £9.9bn, I’ve taken that up to £21.7bn.”
She added: “I know that some people are suggesting that there was a small surplus that the OBR published on Friday. But if I was on this programme today and I was saying £4bn surplus is fine, there was no economic repair job to be done, I think you would rightly be saying that’s not good enough.
“That would have been the lowest surplus that any chancellor ever delivered against the fiscal rules. I was clear I wanted to build up that resilience, and that is why I took those decisions.”
She added that she was confident in her position as chancellor despite calls from the Conservatives and Reform UK for her to resign.
“I was an MP in opposition for 14 and a half years. I have been underestimated all the way through my life. As a young girl from an ordinary background, people make assumptions about me. I’ve defied them before, and I will defy my critics again.”
Starmer and Reeves have spent the past few days defending the decisions they made in the budget, which included freezing income tax thresholds to help pay for more headroom and about £8bn more welfare spending than previously planned.
Much of the criticism directed at Reeves has centred on comments she and her aides made in the buildup to the budget as she contemplated breaking a manifesto commitment and raising income tax rates.
In a speech earlier this month, she said: “It is already clear that the productivity performance that we inherited from the last government is weaker than previously thought.
“A less productive economy is one that produces less output per hour worked. That has consequences for working people – for their jobs and for their wages, and it has consequences for the public finances too, in lower tax receipts.”
Kemi Badenoch, the Conservative leader, said on Sunday she thought the chancellor should resign.
“The chancellor called an emergency press conference, telling everyone about how terrible the state of the finances were, and now we have seen that the OBR had told her the complete opposite,” Badenoch told the BBC.
“Because of that, I believe she should resign.”
Badenoch defended the tone of some of her criticisms, including her personal mockery of the chancellor in the House of Commons.
She accused Reeves in her official budget response of “wallowing in self-pity and whining about misogyny and mansplaining” – comments that Reeves said on Sunday made her “uncomfortable” because of their personal nature.
Badenoch insisted, however, she was right to criticise the chancellor in the tone she did, saying: “My job is to hold the government to account, not to provide emotional support for the chancellor.”
Downing Street defended Reeves over the weekend. A No 10 source told reporters: “The idea that there was any misleading going on about the need to raise significant revenue as a result of the OBR figures, including the productivity downgrade they contained, is categorically untrue.”
Starmer will repeat those sentiments on Monday morning in a speech from Downing Street in which he is expected to praise the budget for reducing the cost of living and inflation.
He will also announce a fresh push to cut business regulation in a renewed effort to boost economic growth, including reforming the rules on building nuclear power plants.
The prime minister is also expected to announce that the business secretary, Peter Kyle, has been asked to look again at the processes surrounding large infrastructure projects in general.
