Rachel Reeves is facing intense scrutiny over allegations she misled voters regarding the UK’s fiscal health, following revelations from the Office for Budget Responsibility (OBR).
The controversy stems from pre-Budget speculation suggesting a £20 billion gap in meeting fiscal rules, partly due to downgraded productivity forecasts.
Ms Reeves herself fuelled these concerns in a 4 November speech, implying tax rises were necessary due to poor productivity’s "consequences for the public finances."
However, the OBR disclosed on Friday that it had informed the Chancellor as early as 17 September that an improved tax take from rising wages and inflation had significantly reduced the shortfall, and by October, it had been entirely eliminated.
In a round of media interviews on Sunday, the Chancellor has insisted she did not lie about the Budget black hole and has affirmed that she will remain chancellor for years to come.
Downing Street has dismissed claims Ms Reeves misled voters as "categorically untrue." Meanwhile, opposition figures are urging the Financial Conduct Authority (FCA) to investigate whether the Treasury deceived the public.
Separately, Sir Keir Starmer is set to back the Budget, though he will stress the Government must go "further and faster" on growth.
Downing Street rallied around Ms Reeves, with a source saying: “No 10 was aware of the content of the speech, which we believe entirely accurately outlined the need to raise revenues.
“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.”
The source also said No 10 was aware of the OBR figures “which showed the need for significant revenue-raising to meet our commitments and to achieve the desired headroom.
“Those figures reflected the OBR’s productivity downgrade. The right choices were then made to stabilise public finances through greater headroom, reduce energy bills and tackle child poverty.”
We will build a Britain where everyone can believe in the future again. pic.twitter.com/YLao7cBUTi
— Keir Starmer (@Keir_Starmer) November 27, 2025
They said the OBR forecast had not accounted for increases in spending resulting from the scrapping of the two-child benefit cap and U-turns on winter fuel payments and welfare cuts.
In an attempt to move the agenda on, Sir Keir will use a speech on Monday to support the decisions taken by Ms Reeves in the Budget and set out his long-term growth plans.
He will praise the Budget for bearing down on the cost of living, ensuring economic stability through greater headroom, lower inflation and a commitment to fiscal rules, and protecting investment and public services.
Sir Keir will say “economic growth is beating the forecasts”, but that the Government must go “further and faster” to encourage it.
He will confirm reforms to the building of nuclear power plants, after the Government’s nuclear regulatory taskforce found that “pointless gold-plating, unnecessary red-tape and well-intentioned, but fundamentally misguided environmental regulation had made Britain the most expensive place to build nuclear power”.
“We urgently need to correct this,” the Labour leader will say.
Business Secretary Peter Kyle will be tasked with applying the same deregulatory approach to major infrastructure schemes and to accelerate the implementation of Labour’s industrial strategy.
Ms Reeves will face a grilling on her pre-Budget statements on the Sunday morning news shows.
She is also expected to tout the Government’s record £7.3 billion investment in local roads maintenance, helping councils fix potholes.
Tory shadow chancellor Sir Mel Stride has reportedly written to the FCA urging it to look into “possible market abuse” arising from “misleading” comments and “the repeated disclosure of market-sensitive details of Budget decisions and the official forecasts”.
The leader of the Scottish National Party in Westminster, Stephen Flynn, also called on the City watchdog to launch an “immediate investigation into the accusations of false and deeply misleading Budget briefings”, questioning whether Ms Reeves’s 4 November speech amounted to “market manipulation”.
A Treasury spokesperson said: “We are not going to get into the OBR’s processes or speculate on how that relates to the internal decision‑making in the build‑up to a Budget, but the Chancellor made her choices to cut the cost of living, cut hospital waiting lists and double headroom to cut the cost of our debt.”
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