Rachel Reeves should resign as Chancellor for ‘lying’ about the state of the nation’s finances in the run-up to her tax-raising Benefits Street Budget, voters have declared.
A Mail on Sunday poll found a majority of more than two to one in favour of her quitting after the fiscal watchdog revealed it told the Chancellor months ago that there was no hole in the public finances, as she had claimed.
As business leaders called for Ms Reeves’ head and Labour MPs concede the Chancellor’s days may be numbered, the Prime Minister also became embroiled in the growing political storm.
On Saturday night, Downing Street indicated that Sir Keir Starmer had been aware of the true situation when Ms Reeves had warned of ‘hard choices’ amid reports of a £30 billion ‘black hole’ in the nation’s finances.
But on Friday the Office for Budget Responsibility (OBR) revealed it had told the Treasury weeks ago that there was actually a £4.2 billion surplus.
Asked whether Sir Keir was aware that the OBR had made clear that the true economic picture was rosier than had been painted, a No 10 source said: ‘The Prime Minister and Chancellor worked together on the Budget, which made fair and necessary choices’.
In the MoS poll, 68 per cent of voters thought Ms Reeves should resign, compared to 32 per cent who think she should stay.
Voters have called for Labour Chancellor Rachel Reeves to resign after she delivered her dreaded budget on Wednesday
In other developments:
- Shadow Chancellor Mel Stride has asked the Financial Conduct Authority for a full investigation ‘into possible market abuse by all those who would have had access to confidential information including at HM Treasury and 10 Downing Street’ on the grounds that markets could have been manipulated by knowingly false statements;
- Ms Reeves denied misleading the public, telling The Guardian that the tax raid was still ‘fair and necessary’ – despite knowing her deficit had disappeared – because the wealthy should share more of the economic ‘burden’;
- A Treasury minister is said to have hinted that Labour would take revenge on the OBR for revealing its private advice to the Chancellor, by suggesting the Government had ‘big plans’ for the watchdog next year;
- Ms Reeves is likely to be forced to appear in the Commons for an emergency statement on the issue on Monday, as ministers admit to the MoS that the situation looks ‘serious’ for the Government.
The MoS survey, by Find Out Now, also found that 65 per cent of voters think that the Labour Government will fall before the end of its five-year term in 2029.
Meanwhile, visitors to the Daily Mail website on Saturday overwhelmingly called for Ms Reeves to resign, with 97 per cent of the 80,000 people who voted demanding she quit.
And it is not just voters. Andrew Sentance, a former interest rate-setter at the Bank of England, was among a number of senior economists calling for her to go, and even Unite trade union boss Sharon Graham criticised her decision to hit ordinary working people with stealth taxes.
Business leaders have also called for Ms Reeves’ head – while Labour MPs concede the Chancellor’s days may be numbered
The Tories on Saturday night launched a public petition calling for Ms Reeves to be sacked, while Reform UK leader Nigel Farage told the MoS: ‘We have a deceitful Prime Minister and Chancellor and both should go. Business has no confidence left in these two.’
On Friday, the OBR revealed that it had written to the Treasury on September 17, estimating the black hole to be £2.5 billion, rather than the £30 billion claimed. And on October 31, the OBR told the Chancellor she was sitting on a surplus and on course to meet the Government’s fiscal targets.
But just four days later, the Chancellor gave a highly unusual press conference in which she spoke of the ‘challenges’ she faced ahead of the Budget and hinted that she would have to breach Labour’s manifesto promises not to increase income tax.
In Wednesday’s Budget, Ms Reeves announced a £30 billion package of tax rises, a large chunk of which went on benefits rises that had been demanded by Left-wing Labour MPs.
In an interview with the MoS, Tory leader Kemi Badenoch said of Ms Reeves: ‘She seems to think she can create her own alternative reality and that people will just buy it. That’s what I was alluding to in my Budget speech when I said she’s taking the public for fools.
‘We learn now the OBR actually told her, ‘You don’t necessarily need to do this.’ And she did it anyway. That is dishonest.
‘That is yet another example of this woman being out of her depth, and in the wrong job.’
Even one Cabinet minister on Saturday night admitted Ms Reeves was in a perilous position because Labour colleagues had been forced to support the line that there had been a fiscal black hole.
He told the MoS: ‘It’s serious. The problem is, Labour MPs bought into this.’
Downing Street indicated that Sir Keir Starmer had been aware there was a £4.2billion surplus in public finances even as Ms Reeves warned of ‘hard choices’ amid reports of a £30bn ‘black hole’
Other angry Labour MPs made it clear that the Chancellor’s position was hanging by a thread. Ex-minister Graham Stringer said: ‘Under similar circumstances, no Chancellor would expect to remain in office. To do so, Rachel Reeves has a lot of explaining to do, to MPs and the public.’
Amid expectations that Opposition MPs will on Monday demand the Chancellor answers questions in the Commons, Mr Stringer added: ‘If there is an urgent question on this, the Chancellor herself must come to the House – not take the coward’s way out and send one of her underlings instead.’
Another Labour MP vented his fury that colleagues had been ‘marched up a hill’ by Ms Reeves to defend the possibility of a manifesto-breaking rise in income tax, rates – which had been widely leaked ahead of the Budget – only for the Chancellor to abandon the plan.
The MP said: ‘She lied about the fiscal black hole – the OBR said it did not exist.’
However, the MP suggested Ms Reeves would survive the current crisis but only because the Prime Minister would not stay in office without her as Chancellor. He said: ‘If she goes, Keir goes.’
For that reason, the Chancellor is likely to stay in post until next year’s local elections. It is feared the results then will be so bad for Labour that Sir Keir will have to resign.
On Saturday night, there were suggestions the Chancellor and the Treasury had already drawn up plans to punish the OBR for revealing its forecasts – and for accidentally leaking the contents of the Budget before Ms Reeves delivered it on Wednesday.
Sources claimed that the day after the Budget, Treasury minister Dan Tomlinson was overheard responding to a question about the future of the independent body by saying: ‘Just you wait – big plans next year.’ On Saturday night, the Treasury denied he had said any such thing.
Tory leader Kemi Badenoch told the MoS that Ms Reeves was living in an ‘alternative reality’
Calling for Ms Reeves to resign, Mr Sentance, a former economic director at the Confederation of British Industry, said: ‘As well as duping us about her discussions with the OBR, Ms Reeves delivered one of the worst Budgets I can remember. Public spending, taxation and borrowing have all been ratcheted up when they should have been cut back. We are heading for a serious economic crisis unless government policies change significantly.
‘If Ms Reeves cannot deliver the necessary U-turn, someone else should take charge.’
Ken Costa, City grandee and former chairman of financial services group Lazard International, said: ‘The OBR letter has caught Reeves out. It is an indictment of her calculated intention to withhold the crucial OBR finding that there was no public finance black hole.’
A Treasury spokesman said: ‘This Government fully backs the independent OBR whose impartial forecasts underpin stability, and the fair and necessary choices the Chancellor made at the Budget. It is this Government who introduced a strengthened fiscal lock after the previous one recklessly disregarded OBR forecasts.’
Find Out Now surveyed 2,002 British adults on November 29.
