Keir Starmer has insisted there was ‘no misleading’ by the Chancellor ahead of last week’s Budget amid an escalating clash with the government’s fiscal watchdog.
The Office for Budget Responsibility (OBR) has claimed Rachel Reeves was well aware its economic forecast was rosier than expected – despite her using a supposed ‘black hole’ to justify her tax hikes.
Last Wednesday, she told MPs she would raise billions by freezing income tax thresholds, then use that cash to increase her headroom and pay for measures including the scrapping of the two-child benefit cap.
The announcement came after weeks of briefing and hinting from the Treasury that the Chancellor was working with a bleak UK economic outlook.
But shortly after the Budget, the OBR made an unusual intervention to reveal the economy wasn’t in as much trouble as some believed.
In a speech this morning, Sir Keir Starmer denied Reeves had given the country a false impression in the lead-up to her big moment last Wednesday.
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He argued that the OBR’s productivity review had showed the Treasury had £16 billion less to play with, and that was not ‘an easy starting point’ even if that shortfall was cancelled out by increased tax intake.
He said the Budget was a ‘moment of personal pride for him’, with a particular focus on the end of the two-child limit which is expected to lift hundreds of thousands of kids out of poverty.
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