Reeves accused of forcing OBR chief to quit after watchdog revealed truth about Budget black hole
Rachel Reeves is accused of forcing the head of Britain’s Budget watchdog to resign after revealing that claims he had made about public finances were false.
Conservative Party leader Kemi Badenoch told Prime Minister’s Questions that Richard Hughes, the former head of the Office for Budget Responsibility (OBR), was “expelled for telling the truth” after the Chancellor “distorted the facts” about the Budget black hole.
It comes after James Murray, chief secretary to the Treasury, confirmed the department was investigating multiple leaks ahead of the Budget, which leading economists told the Treasury Select Committee were “detrimental” to the UK and threatened to “bring it into disrepute” internationally.
Mr Hughes left his post on Monday after budget details were leaked 40 minutes before they were due last week; The investigation revealed a long-standing systematic problem within the organization.
But Sir Keir Starmer was forced to get defensive on the issue during weekly talks at PMQs.
Ms Badenoch said: “We now know that the OBR chairman was sacked for telling the truth that the Chancellor did not need to increase taxes on workers. “We also know that the Chancellor distorted the facts by briefing the media to break promises and raise taxes.
“If he was CEO he would be fired and could even be prosecuted for market abuse. That’s why we wrote to the Financial Conduct Authority, so will the prime minister ensure the Chancellor fully co-operates with any investigation?”
To laughter from Labor MPs, Sir Keir replied: “He’s totally losing the plot.”
The Prime Minister then added: “May I pay tribute to Richard Hughes for his leadership of the OBR. He has explained very clearly why he is resigning and I have made my support for the OBR very clear.”
“But he says ‘take responsibility’; under this chancellor, growth has risen this year, outpacing and exceeding forecasts, wages have risen more since the general election than in 10 years of the Conservative Party, I think we’ve had five rate cuts, NHS waiting lists are down, we’ve invested in this country at a record level.
“We are opening a new page to their austerity policies.”
But Ms Reeves, who sat stone-faced next to the prime minister during the exchange, hurried away when her shadow, Sir Mel Stride, asked an urgent question about the resignation.
Instead, he left his deputy, Mr. Murray, to answer questions as pressure on his position continued to mount.
The row was linked to an unprecedented press conference by Ms Reeves ahead of the Budget; here he was arguing that income tax should be increased due to the Budget black hole.
But the OBR later revealed it had already informed it that higher-than-expected tax revenues had left it £4bn surplus.
Sir Mel said: “The surrounding conditions [Richard Hughes’s] “The resignation remains uncertain,” he said, adding that it was “a useful distraction for the chancellor.”
He said Mr Hughes had taken the “unprecedented step” of publishing details of pre-Budget discussions because he was “concerned about partial leaks about the OBR’s forecasts”.
He wanted to know “whether there was any pressure on Mr Hughes to resign”.
Mr Murray said the OBR’s letter setting out full details of the pre-Budget briefing had been approved for publication by Ms Reeves.
He said: “Mr Hughes’ decision to resign was Mr Hughes’ own matter” and the minister insisted the government was “fully committed to the independence of the OBR”.
In later interviews he was reminded that the previous chancellor, Hugh Dalton, had resigned in 1947 after accidentally leaking a single sentence of his own before the budget was announced.
Subsequently, some economists at the UK’s leading think tanks warned that “unprecedented” government briefings on the Budget in the months before the official announcement were in danger of damaging the UK’s reputation.
Prof Tera Allas, of the Productivity Institute, warned that the briefings threatened to “damage the reputation” of the UK if this situation continued.
He added: “I would add that such a long period of speculation is detrimental to consumers and businesses, the actors that may or may not drive growth in the economy.”
Ruth Curtis, chief executive of the Resolution Foundation and working for the Treasury, said: “The amount of speculation and pre-briefing in the preparation for this Budget has been unprecedented and unhelpful, and I hope we will have the opportunity to reflect on this and consider what we can change to improve the UK’s fiscal framework.”
Helen Miller, director of the Institute for Fiscal Studies (IFS), was particularly critical of Ms Reeves’ pre-Budget speech, in which she was accused of misleading the public and markets.
Ms Miller said: “[The briefings] It was worrying for a number of reasons, not only because the market could move, but also because firms and individuals were delaying their decision-making processes.
“Rachel Reeves herself gave a speech on national television, and I think about what that really means. [was] That wasn’t the clearest communication I could think of because I think no one knew exactly what the chancellor was trying to make there.
