Keir Starmer insists there was ‘no misleading’ after claims Rachel Reeves lied in run-up to Budget

Keir Starmer has insisted there was “no deception” by his chancellor, who is accused of lying about the UK’s finances as the Budget approaches amid growing questions about his own future.

The Prime Minister took the unusual step of appearing with a speech just five days after Rachel Reeves unveiled the budget and faced a barrage of questions about whether it gave him the power to mislead the public about the true state of the economy.

The debate centers on a press conference in November in which Ms Reeves warned about the state of public finances and suggested income tax might need to be increased.

It has since been revealed that, ahead of announcing a £26bn tax increase in the Budget, he failed to disclose information from the Office for Budget Responsibility (OBR) that showed tax revenues were much better than expected.

However, amid demands for the chancellor to resign for allegedly misleading the public, OBR chairman Richard Hughes was the only one to resign on Monday evening; This was hours after the publication of a damning internal investigation into how the organization mistakenly leaked Budget details before Ms Reeves made her speech to the House of Commons last Wednesday.

Conservative Party leader Kemi Badenoch said Ms Reeves used Mr Hughes as a “human shield” and should be sacked after claiming he was “lying to the public”.

Speaking less than 24 hours after Ms Reeves denied lying about the state of the public finances before the Budget, Sir Keir was forced to repeatedly go on the defensive as he delivered a speech highlighting his government’s “moral mission” to tackle child poverty.

He said: “There was no mistaking it, and I certainly don’t accept – and I was getting the figures – that being told that the OBR productivity review meant you were getting £16bn less income than you would have otherwise suggests you have an easy starting point.

“Yes, of course all the other numbers need to be taken into account. But we started the process with much less than we would normally have.”

He said there was no “pretending” this was a “good starting point”, adding that he thought at some point he would have to breach Labor’s manifesto by citing aborted plans to increase the basic income tax rate.

At one point he said he thought Labor would have to breach its manifesto, in an apparent reference to aborted plans to increase the basic income tax rate.

He added: “Then it became possible to do this without violating the manifesto.

“Given the choice between the two, I didn’t want to violate the manifesto and that’s why we came to these decisions.”

While Sir Keir was giving his speech at a community center in the City of London, Ms Reeves traveled to an investment event in Wales, thus avoiding having to explain her actions in an emergency statement to the House of Commons.

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Instead, his deputy, Treasury Secretary James Murray, was given the task of repairing the damage done to the government’s reputation.

Speaking at the event, the chancellor rejected claims by an unnamed minister that the cabinet had not been briefed “at any point” about the “authenticity” of the OBR forecasts.

“You can never expect the prime minister and chancellor to look at all the detailed figures,” he said.

“Cabinet is briefed on Budget figures on Budget morning. Of course, we go through things that affect individual government departments, but full information on the Budget is not expected to be made available until the Chancellor delivers the Budget.”

“Obviously it was leaked early this time, but not by the Treasury.”

The Chancellor said the OBR forecast, which showed a £4.2bn surplus under borrowing rules, did not take into account the welfare reform U-turn or the removal of the two-child benefit cap.

This came as ministers were publicly briefed ahead of the Budget about how they too had been misled by Sir Keir and Ms Reeves.

A minister told Independent The results of the budget were “less than ideal”.

Some MPs have complained about the poor communications strategy that has dogged the government since it was elected last July.

A Labor MP said: “We need to look at who worked for Rachel and who was allowed to explain the budget for months.”

Another asked: “Why didn’t we have a clear message on child poverty as we prepared for this budget?”

Some have noted that both Sir Keir and Ms Reeves opposed getting rid of the two-child benefit cap when they were elected last year, but later made it central to the budget after pressure from Labor MPs.

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But there was also anger among MPs as ministers claimed they had been “misled”.

One MP said: “People need to keep their heads down. We’ve just lifted the two-child benefit limit, we should celebrate that and unite behind that. I’m not sure what ministers are up to.”

There were concerns that allies of Health Secretary Wes Streeting might try to take advantage of the situation to launch a coup and oust Sir Keir.

Meanwhile, Ms Badenoch was applauded by business representatives when she claimed Ms Reeves was lying at a question-and-answer session in London.

He later claimed the chancellor had tried to use Mr Hughes as a “human shield” after the watchdog published a report saying the leak was the worst failure in its 15-year history.

Mr Hughes, who has served as chairman of the OBR since 2020 and was reappointed to the role for a second five-year term in July this year, said he was resigning to allow the OBR to “recover quickly from this regrettable episode”.

shadow chancellor Sir Mel Stride said in the House of Commons. “The Chancellor’s credibility is in tatters, and disrespect for this House must be added to the long list of failures on these matters.”

There have been calls for an investigation by the Financial Conduct Authority and the government’s ethics adviser Sir Laurie Magnus.