Craig Munro
Published December 1, 2025 11:20am
Updated December 1, 2025 12:03pm
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Previous Page Next PageKeir Starmer has insisted there was ‘no misleading’ by the Chancellor ahead of last week’s Budget amid an escalating clash with the government’s fiscal watchdog.
The Office for Budget Responsibility (OBR) has claimed Rachel Reeves was well aware its economic forecast was rosier than expected – despite her using a supposed ‘black hole’ to justify her tax hikes.
Last Wednesday, she told MPs she would raise billions by freezing income tax thresholds, then use that cash to increase her headroom and pay for measures including the scrapping of the two-child benefit cap.
The announcement came after weeks of briefing and hinting from the Treasury that the Chancellor was working with a bleak UK economic outlook.
But shortly after the Budget, the OBR made an unusual intervention to reveal the economy wasn’t in as much trouble as some believed.
In a speech this morning, Sir Keir Starmer denied Reeves had given the country a false impression in the lead-up to her big moment last Wednesday.
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He argued that the OBR’s productivity review had showed the Treasury had £16 billion less to play with, and that was not ‘an easy starting point’ even if that shortfall was cancelled out by increased tax intake.
Rachel Reeves delivered a long-awaited Budget in Parliament last week (Picture: House of Commons)
Starmer said the Budget was a ‘moment of personal pride for him’, with a particular focus on the end of the two-child limit which is expected to lift hundreds of thousands of kids out of poverty.
The policy is very popular with Labour MPs, who cheered and waved their order papers in the air when Reeves announced it on Wednesday.
But the public is less favourable towards it, with a YouGov poll last week showing 56% of Brits would prefer the cap remained in place.
Other measures in the Budget, such as increased taxes on the gambling industry and the freezing of rail fares, were considerably more popular.
The PM acknowledged the tax rises announced last week would ‘make life harder for people’, adding he was ‘not going to pretend there aren’t alternatives’.
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However, he said other options such as borrowing more or cutting public services had been ‘tested to destruction’.
His speech struck a positive tone, asking people to trust that the decisions made by the government would improve their lives once they had bedded in.
Starmer said: ‘We have now walked through the narrowest part of the tunnel.
‘Because – while I know it’s still hard for a lot of people, while I know the cost of living crisis has not gone away – in the year ahead, you will see the benefits of our approach. Not just in the national statistics, but in your communities.’
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