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The fiscal watchdog said the chancellor knew about its revised prediction well before she changed course to raise taxes
Athena Stavrou,Millie Cooke,Kate Devlin,James C. ReynoldsFriday 28 November 2025 14:35 GMTComments
CloseBritons paying higher tax: PM defends changes despite rising living costs
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Rachel Reeves has been accused of misleading the country over the state of public finances in the run-up to the Budget.
The Office for Budget Responsibility (OBR) said on Friday that a downgrade in productivity forecasts that the Chancellor had used to illustrate the “challenges” facing the nation had been more than offset by a rise in tax revenues due to inflation.
Richard Hughes, chairman of the OBR, took what he called the “unusual step” of writing to the Treasury select committee to reveal that Reeves had been told in September that the watchdog had only made small downgrades to its assessment. Reeves was then told at the end of October she was sitting on a surplus of some £4.2 billion.
The chancellor nonetheless presented the forecasts as unexpectedly bleak and argued for tax rises, insisting she must “deal with the world as I find it, not the world as I might wish it to be”. She said public finances were in a worse state than expected after “years of economic mismanagement”.
Paul Johnson, a former head of the Institute for Fiscal Studies (IFS) think tank, said “it probably was misleading”. “It was designed to confirm a narrative that there was a fiscal black hole that needed to be filled with significant tax rises,” he told The Times. “In fact, as she knew at the time, no such hole existed.”
Kemi Badenoch called for the chancellor to resign as Downing Street refuted the suggestion Reeves had misled the public.
The Independent has approached the Treasury for comment.
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Timeline as Reeves faces accusations of misleading the public
Rachel Reeves was told by the OBR in September that prevailing economic winds meant the presumed £20bn gap in public finances would be much smaller than expected in the run up to the Budget.
Reeves now faces accusations she misled the public by stressing the need for tax rises as late as November. Here’s how it unfolded:
17 September: The OBR told the chancellor in its first forecast that the fiscal watchdog had only made small amends to its overall assessment of where public finances stood.
The black hole was estimated at £2.5 billion at this point.
31 October: The OBR told Reeves that she was now sitting on a surplus of some £4.2 billion, as inflation saw tax revenues increase.
4 November: Reeves delivers a crisis press conference warning that public finances are in dire straits, seen widely as a way to prepare the country for tax hikes - potentially a breach of manifesto promises.
13 November: The prospect of a hike in income tax rates - which was trailed for several weeks - were dropped on November 13, with the Treasury citing improved forecasting.
26 November: The chancellor delivers the Budget and raises taxes by £26 billion.
James Reynolds28 November 2025 14:35Warning on state of finances ‘probably misleading’ - former IFS head
Paul Johnson, a former head of the Institute for Fiscal Studies (IFS) think tank, said “it probably was misleading”.
“It was designed to confirm a narrative that there was a fiscal black hole that needed to be filled with significant tax rises,” he told The Times. “In fact, as she knew at the time, no such hole existed.”
James Reynolds28 November 2025 14:20Downing Street refutes claims Reeves misled the public
Downing Street was asked on Friday whether Ms Reeves' warnings of coming difficult decisions despite the OBR's improved forecasting meant she had misled the public and the markets in the run-up to the Budget.
"I don't accept that," the Prime Minister's official spokesman said.
He added: "As she set out in the speech that she gave here (Downing Street), she talked about the challenges the country was facing and she set out her decisions incredibly clearly at the Budget."
James Reynolds28 November 2025 14:05Badenoch calls for Reeves to quit over 'misleading public' on budget
Kemi Badenoch called for the chancellor to lose her job amid accusations she misled Britain over the state of public finances.
"Yet more evidence, as if we needed it, that the Chancellor must be sacked,” the opposition leader said on Friday.
“For months Reeves has lied to the public to justify record tax hikes to pay for more welfare."
“Her Budget wasn’t about stability. It was about politics: bribing Labour MPs to save her own skin. Shameful."
James Reynolds28 November 2025 14:02Chancellor accused of misleading Britain over public finances
The Chancellor was accused of misleading Britain over her assessment of the state of public finances ahead of the budget.
The Office for Budget Responsibility (OBR) said on Friday that a downgrade in productivity forecasts that Rachel Reeves had used to illustrate the “challenges” facing the nation had been more than offset by a rise in tax revenues due to inflation.
Richard Hughes, chairman of the OBR, wrote to the Treasury select committee and revealed that Reeves had been told in September that the OBR had only made small downgrades to its overall assessment.
Reeves had warned it would have “consequences” for people’s jobs and wages, and said she would have to raise taxes as a result.
Labour faces scrutiny over the decision to raise taxes in the budget, which the Institute for Fiscal Studies (IFS) think tank said amounts to a breach of manifesto promises. The prime minister has refuted the charge.
James Reynolds28 November 2025 13:21Breaking: France agrees to stop migrant boats at sea after pressure from Starmer
French police will intercept small boats at sea in an attempt to stop migrants crossing the Channel.
A document seen by French newspaper Le Monde, signed by four prefectures in the north of France, agrees that maritime police will start “planned operations” to intercept the dinghies. The push-backs will start initially at sea, and then be conducted in the “inland waters” of ports and channels, the paper reported.
Holly Bancroft has the full story:
France agrees to stop migrant boats at sea after pressure from Starmer
French police agree to intercept migrant ‘taxi boats’ at seaAthena Stavrou28 November 2025 13:07Businesses are changing their recruitment strategies after Budget, poll shows
Businesses are preparing to slow hiring as a result of measures in the autumn Budget, which puts Britain on course for a record tax burden, a new snap poll suggests.
Some 56 per cent of business leaders said there were likely to be fewer hires than originally planned.
The poll of 500 business leaders was carried out by WPI Strategy and polling firm Merlin Strategy to gauge sentiment among businesses in the immediate aftermath of Wednesday’s Budget statement.
The extended freeze on income tax thresholds is seen as the most damaging impact of the Budget, with 47 per cent of business leaders saying it will have a negative impact on their business and staff, the survey showed.
Despite this, 45 per cent said it was a justified measure to raise revenue.
The poll also showed that 56 per cent of respondents felt it would have been better for the Government to raise income tax but leave all other taxes as they are.
Meanwhile, about two-thirds of business leaders fear they will be targeted with further tax rises in the near future.
(PA Archive)Athena Stavrou28 November 2025 12:48What rights will still be given on day one of employment?
The Employment Rights Bill is now expected to make only parental leave and sick pay available from day one of the job for all workers.
However, protection from unfair dismissal will now only be secured after six months, rather than on day one as was the case when the bill was introduced.
(Getty Images)Athena Stavrou28 November 2025 12:26What is Labour’s Employment Rights Bill – and how has it changed?
The government has come under fire for rowing back on a manifesto commitment as it changes a key element of its landmark workers’ bill.
Here is an overview of how the bill will change the workplace for employees across the UK:
What is Labour’s Employment Rights Bill – and how has it changed?
Labour has been accused of breaching a manifesto commitment over the changeAthena Stavrou28 November 2025 12:04Backbenchers and union demand u-turn reversal
Backbench MPs and trade union have urged Sir Keir Starmer to reverse his u-turn on workers’ rights.
Labour MP for Middlesbrough and Thornaby East, Andy McDonald, branded the move a “complete betrayal” and vowed to push for its reversal.
He said: “we cannot support that halfway measure”, adding: “This is a wrong-headed move and I will campaign to have this concession reversed.”
Labour affiliated transport and travel union TSSA also urged the government to reinstate its plans to give workers the right to claim unfair dismissal from day one in the job.
“Our union has long campaigned for strong, meaningful rights from the first day of employment, arguing that day one protection is essential to safeguard workers from arbitrary and unjust treatment,” TSSA General Secretary, Maryam Eslamdoust said.
“This remains our position and it’s vital that the government thinks again about this damaging u-turn.”
(Getty Images)Athena Stavrou28 November 2025 11:46Newer1 / 3OlderMore about
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