Starmer leads fightback as budget row rumbles on for Reeves | Budget 2025

The political fates of Keir Starmer and Rachel Reeves are intertwined. Allies say if one goes, the other will follow.

So, following the budget, the Conservatives sought to focus their response on the Chancellor’s personal ethics, accusing Reeves of lying about the rationale behind record-breaking tax rises.

This is why Starmer chose to respond personally. In his speech on Monday, he will try to draw the line and refocus attention on the government’s broader economic plan.

Writing in the Guardian before this speech, the prime minister argues: “We made the right choices for Britain in last week’s budget, cutting the cost of energy with a £150 cut on bills, protecting the NHS and tackling the scourge of child poverty by removing the two-child limit.”

Seeking to buy himself and his chancellor political breathing space, he will argue on Monday that his program – which includes welfare reform and deregulation – is a “big, bold long-term plan” and not a “set of quick fixes”.

Given the debate over whether the chancellor lied about why he raised taxes, the prime minister has reason to shift his focus to his long-term economic goals and move away from the immediate aftermath of the budget.

Conservatives accused Reeves of using reduced productivity forecasts from the Office for Budget Responsibility (OBR) as a smokescreen for tax increases.

While the OBR has cut its productivity forecasts, it has also raised its forecasts for wages and tax revenues; This left the Chancellor with a surplus rather than a gap.

Conservative Party leader Kemi Badenoch also accused the chancellor’s allies of trying to manipulate financial markets by briefing on November 14 that Reeves had decided to abandon a plan to increase income tax rates due to better-than-expected news from the OBR.

In fact, Reeves and his team have known about the OBR’s more optimistic outlook for some time, even when he gave a rare pre-budget speech on November 4 warning that a lower productivity outlook would have consequences for wages and tax revenues.

That timetable was spelled out last week in a letter from OBR chairman Richard Hughes to the Treasury select committee.

The letter was a correction to a Treasury briefing on November 14, when officials tried to calm investors spooked by the news that the chancellor had abandoned plans to increase income tax rates overnight.

This flurry of briefings, which come after weeks of stories about the OBR – including Reeves publicly questioning the timing of the productivity review and criticizing it for not “scoring” pro-growth government policies – appears to have particularly irritated the independent forecaster.

Reeves argued on Sunday that he should raise taxes to preserve his fiscal rules and increase the government’s buffer against unexpected costs to keep borrowing costs low. His allies say he would be in a much more comfortable position were it not for the drop in productivity.

But Reeves and Starmer know the tougher long-term problem is that the public appear to have made up their minds about how the government runs the economy. Polling for More Commonality after the Budget shows just 16% of voters think the Chancellor is doing a good job; This is almost the same as previously thought.

The prime minister hopes voters will eventually feel the impact of higher public spending and business liberalization. On Monday, he will argue that his plan should be considered only at the end of parliament.

But he may find that time is a luxury he doesn’t have, as voters become restless about improving their daily lives.