Chancellor Rachel Reeves is facing an ethics inquiry after Nigel Farage reported her to the Prime Minister’s independent adviser, Sir Laurie Magnus, alleging she misled the public about the state of the nation’s finances ahead of last week’s £30bn tax rises.
Farage accused Reeves of a “sustained and deliberate narrative” suggesting the public finances faced a major shortfall, despite the Office for Budget Responsibility (OBR) telling her in October that no deficit existed and she had “£4.2bn to spare”.
He said her tax rises were “discretionary policy choices, rather than unavoidable fiscal necessity”.
On Sunday, Reeves repeatedly insisted she “didn’t lie” before the Budget, though acknowledged she was “asking working people to pay a bit more”.
The OBR does not reference the £16bn productivity hit claimed by Reeves. Its chairman, Richard Hughes, said increases in wages and inflation had “offset the impact of the productivity downgrade”.
Senior Labour figures are reported to believe they were also misled about the state of the public finances. One Cabinet minister described the Budget as “a disaster from start to finish”.
Kemi Badenoch said: “She was raising taxes to pay for welfare… and because of that, I believe she should resign.”
The Conservatives have called for Reeves to answer an urgent question in the Commons today and have asked the Financial Conduct Authority to investigate potential market manipulation.
Reeves and Hughes will face MPs on the Treasury Committee later this week following last week’s unprecedented leak of the OBR forecast.