Keir Starmer insisted tax rises were the only option at the Budget today as he launched a desperate bid to shore up his Chancellor.
The PM told a press conference that austerity or more borrowing were the only other choices as he defended Rachel Reeves’ fiscal package.
The claim will fuel fury after the OBR watchdog revealed it told ministers months ago that they had not detected any black hole in the public finances.
Despite the positive news delivered in secret, Ms Reeves repeatedly talked up the problems to justify the massive tax raid announced last Wednesday.
Sir Keir begged angry Labour MPs to stick with his ‘long term plan’ after a weekend of brutal recriminations against Ms Reeves, saying they had passed through the ‘narrowest part of the tunnel’.
‘Our choices were fair, they were necessary and they were fundamentally good for growth,’ the premier said.
In an effort to blunt criticism that the monster tax rises are being blown on benefits, Sir Keir vowed a new crackdown on welfare.
However, even Cabinet ministers are said to be furious at being kept in the dark, while Ms Reeves is facing a twin threat of probes from No10’s standards watchdog and the financial regulator.
Keir Starmer insisted tax rises were the only option at the Budget today as he launched a desperate bid to shore up his Chancellor
Keir Starmer is holding a press conference defending the Budget and begging Labour MPs to stick with his ‘long term plan’ amid recriminations at Rachel Reeves (pictured together)
He will also deliver another sop to mutinous Labour MPs by hinting at a major new move to unwind Brexit.
Sir Keir’s and Ms Reeves’ fates are seen as fundamentally intertwined, with mounting questions over whether they can cling on.
Last night Ms Reeves told Channel 4 News there was no need for an investigation into whether she misled the markets and taxpayers.
Touring broadcast studios amid rising fury at the way she softened up the public for monster tax hikes yesterday, the Chancellor said the PM had been fully aware of what she was doing.
She insisted OBR’s downgrades were to blame for her decisions – even though the watchdog had in fact been informing her privately that there was no structural black hole in the finances.
And she denied that her extraordinary fear-mongering about the state of the government’s books amounted to lying.
Ms Reeves spent weeks before the fiscal package was unveiled talking up how the independent body had found a huge black hole in the books.
However, OBR has revealed it told her as long ago as September that productivity downgrades were being offset by better tax revenues.
In fact by the end of October, Budget forecasts were showing her running a small surplus, with only Labour’s own political choices to boost benefits meaning that she needed to impose a massive package of tax hikes.
Ms Reeves told Sky News that the ‘big downgrade in productivity’ was the main factor in her decisions, saying it had a ‘big impact’ and ‘that’s why I had to ask people to contribute more’.
Ms Reeves admitted she did know that she was running a surplus when she gave an extraordinary breakfast-time speech talking up the grim state of the public finances.
But she denied ‘lying’ to the public about the situation, arguing that she needed a bigger buffer to avoid markets panicking about government debt.
Ms Reeves sparked shock from presenter Trevor Phillips by initially dodging a question on whether she had ‘lied’ to the public.
But pressed again she said: ‘Of course I didn’t.’
The Times reported that even some of her ministerial colleagues feel misled. A senior figure told the paper: ‘At no point were the Cabinet told about the reality of the OBR forecasts.’
Writing to the PM’s ministerial standards adviser, Sir Laurie Magnus, Nigel Farage said voters faced ‘the heaviest tax burden in generations on the basis of what increasingly looks like a sustained misrepresentation of the true fiscal position’.
He said Ms Reeves carried out a ‘sustained public and media campaign portraying the public finances as being in a state of collapse’ to lay the ground for a £30billion tax raid.
Mr Farage told Sir Laurie: ‘Treasury officials repeatedly briefed journalists about an alleged ”black hole” of £22billion and even £40billion, figures incompatible with OBR forecasts the Chancellor had seen. There is no indication she corrected those briefings or disassociated herself from them.’
A letter from the OBR to the Treasury Select Committee has been published spelling out the timetable of exactly what forecasts were provided to the Chancellor as she drew up her Budget package
The Chancellor offered only lukewarm support for Richard Hughes amid Treasury anger at the Budget leak and revelations about when she was told there was no hole in the public finances
The Chancellor appears to have broken the Ministerial Code, which requires her to ‘give accurate and truthful information to Parliament’ and ‘be as open as possible with Parliament and the public’, Mr Farage said.
She could also face a probe by the Financial Conduct Authority (FCA) after the Tories accused her of ‘possible market abuse’, causing volatility in the City with ‘briefings, leaks and spin from HM Treasury’. The Tories demanded Ms Reeves come to the Commons today to ‘explain the extent to which she misled the public’.
Alex Burghart, shadow Chancellor of the Duchy of Lancaster, told Sir Keir: ‘These briefings have affected not only the integrity of the fiscal process, but the rights of Members of Parliament and more importantly the lives of working people.’
Repeating her call for Ms Reeves to resign, Tory leader Kemi Badenoch told the BBC: ‘The Chancellor called an emergency Press conference… about how terrible the state of the finances were and now we have seen that the OBR had told her the complete opposite.’
