FUMING ministers have said Rachael Reeves “misled” the cabinet with tax rises after she was accused of making up a £30billion “black hole” deficit.
The under-fire Chancellor today claimed the Budget changes were “out of my control” and confirmed Sir Keir Starmer approved her massive tax raid.
Workers bore the brunt after the Chancellor stood up at the despatch box on Wednesday and announced an eye-watering £26billion package of tax rises.
She ramped up the fear factor at a Downing Street press conference on November 4, hinting she would be forced to hike income tax and insisting working people would “all have to do our bit.”
She spent weeks warning Britain she had “tough decisions” to make, claiming a shock productivity downgrade had blown open a £30billion “black hole”.
The Chancellor told the MPs that Britain faced challenges due to “tariffs, unstable borrowing costs, inflation and long-term productivity”.
But a letter published by the OBR revealed it told the Treasury on September 17 the gap was just £2.5billion.
And by October 31, the watchdog said the black hole had vanished altogether — replaced by a £4.2billion surplus above her day-to-day spending plans, meaning her own fiscal rules were already met without raising a single tax.
Only Ms Reeves and Sir Keir were aware of the improvement in the forecasts.
Ms Reeves is now facing calls to resign after she was accused of conning the country with a fake fiscal black hole to justify her tax raid.
One cabinet minister told The Times: “Why did Keir and Rachel allow the country to believe for so long that we would break our manifesto by putting up income tax by 2p when they would have known that wasn’t true?”
The minister said that the cabinet was not told about the OBR forecasts “at no point” .
They added that had they known about the positive forecast, they would have been “in a position to advise against setting hares running on income tax and giving the public the impression we are casual about our manifesto commitments.”
Almost one million more Brits will be hauled into the higher band of income tax after she broke her promise to end threshold freezes.
But Ms Reeves today denied accusations of conning the public.
Asked whether she had misled the public, Ms Reeves tried to repeatedly swerve the question before finally telling Sky News: “Of course I didn’t.”
Ms Reeves also confirmed the PM knew of the decisions she made and what she said in her November 4’s press conference.
She added: “We are a partnership and we have a Budget board, the Prime Minister, Keir and myself met regularly to discuss the Budget.
“I’m really proud of the choices that we made to cut waiting lists, to cut inflation and to build up the resilience in the economy.”
Downing Street has since confirmed Sir Keir Starmer saw the updated OBR figures before approving her budget speech.
Ms Reeves claimed she had been “very clear” with the public about the need to put up taxes.
Asked why she did not tell the public about the surplus, she replied: “I said in that speech that I wanted to reduce the debt and reduce borrowing so I increased that headroom.
“I’m very happy to be answerable.”
Labour’s growing collapse in trust with Brits
By Martina Bet
RACHEL Reeves’s insistence she “didn’t lie” has become the latest flashpoint in a far deeper problem for Labour: a growing collapse in political trust.
The OBR’s own account shows the Treasury was told there was no black hole – but a £4.2bn surplus – before the Chancellor warned the public that the nation’s finances were in crisis.
Voters might accept tough choices, tax rises and painful trade-offs, but they cannot stomach feeling they are being taken for fools.
When Ms Reeves claims she was “clear” with the public, while interviewers point out that the warnings she gave do not match the information she had, the gap between political language and reality widens.
And once that gap opens, people stop giving politicians a hearing altogether.
Unless the government finds a way to speak plainly, admit choices openly and stop dancing around the obvious, millions of voters will simply continue switching off – and once they do, it’s almost impossible to win them back.
Tory leader Kemi Badenoch said it was “yet more evidence” the Chancellor “must be sacked”.
She added: “For months Reeves has lied to the public to justify record tax hikes to pay for more welfare.
“Her Budget wasn’t about stability. It was about politics: bribing Labour MPs to save her own skin. Shameful.”
Reform UK also piled in, with deputy leader Richard Tice accusing Ms Reeves of “deliberately scaring businesses, consumers and the markets” in the run-up to the Budget.
He said: “She has deliberately crashed the economy and must now consider her position.”
Downing Street denied that Ms Reeves had “misled” the markets and the public.
When quizzed over the OBR’s revelations, a spokesman said: “At the Budget she set out the decisions very, very clearly.”
What was in the Budget?
FUEL DUTY FROZEN: Fuel duty stays at 52.95p a litre but the temporary 5p cut is kept only until September 2026 before being unwound.
NEW EV CHARGE: Electric car drivers will pay a road charge of 3p per mile, while plug-in hybrid drivers will pay 1.5p per mile.
MANSION TAX: Homes worth over £2m face annual surcharges of £2,500 to £7,500 from 2028.
PROPERTY INCOME TAX RISES: Landlords face rates rising by two points from April 2027.
ENERGY BILLS CUT: Energy bills will fall by £154 a year as green charges are taken off bills and paid by the Treasury instead.
TAXI TAX: Uber and Bolt must pay 20 per cent VAT on fares in London, raising £700m.
RAIL FARES FROZEN: First nationwide freeze in 30 years on season and return tickets.
STUDENT LOAN THRESHOLDS FROZEN: Plan 2 thresholds fixed for three years from 2027, raising £400m.
TOURIST TAX: Regional mayors get powers to levy hotel and B&B charges.
GROWTH DOWNGRADED: Economy now forecast to grow 1.5 per cent a year, with debt rising to 96 per cent of GDP by 2030.
PRESCRIPTION COST FROZEN: The cost of an NHS prescription in England will be frozen at £9.90.
NATIONAL WAGE INCREASES: Hefty rise to £12.71 an hour and a sharper 8.5 per cent jump for 18–20-year-olds.
MILSHAKE TAX: Tax on fizzy drinks will be extended to milk-based products in 2028, taking in pre-packaged milkshakes and coffees that are high in sugar.
WELFARE SPENDING SURGE: Welfare costs will soar by £16bn by 2030 as scrapping the two-child cap, extending winter fuel payments, rising disability claims and inflation-linked benefits all drive the bill up.
BUSINESS RATES SHAKE-UP: More than 750,000 shops, pubs and hotels get permanent cuts, paid for by higher bills on properties worth over £500,000, including big online warehouses.