Richard Jukes

@dickjukes

Chief Executive, Grayling. Views are mine.

London

Joined March 2009

170 Following

253 Followers

2.6K Posts

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Steven Swinford

@Steven_Swinford

7 months ago

Rachel Reeves said repeatedly during the run-up to the Budget that she would have to raise taxes because of a productivity downgrade by the OBR The Office for Budget Responsibility has today suggested that was not the case Here is what Reeves said publicly - and what the OBR was telling her behind closed doors: September 17 The Office for Budget Responsibility informs Reeves that its productivity downgrade has been offset by increased tax revenues from “increases in real wages and inflation”. It says there is a £2.5bn deficit. September 26 Reeves says that the productivity downgrade has been “challenging”. “I’m not going to duck that challenge,” she says in a clear hint of tax rises to come October 20 Behind the scenes things have got better for the Treasury, with stronger than expected wage growth leading to higher tax revenues. The productivity downgrade has now been entirely wiped out and there is a net positive of £ 2.1 billion. October 27 The Financial Times is leaked details of the productivity downgrade, which it describes as a “£20million hit to public finances”. The fact it has been offset by rising tax revenues is not briefed out. October 31 The OBR hands the Treasury its final “pre-measures” forecast. It’s good news. The finances are now £4.2billion in the black. November 4 Reeves uses a Downing Street press conference to signal she is preparing to break Labour’s manifesto and raise income tax because of the downgrade in the public finances. “What I want people to understand ahead of the budget, is the circumstances we face,” she said. “I could … sweep those challenges under the carpet. I am being honest with people.” November 10 Reeves signals again that she is preparing to raise income tax to fill a black hole in the finances: “It would, of course, be possible to stick with the manifesto commitments [not to raise the main taxes]. But that would require things like deep cuts in capital spending.” November 13 The Financial Times reveals that Reeves has abandoned plans to raise the basic rate of income tax, prompting market turmoil amid concerns she has bowed to pressure from Labour MPs. The Treasury briefs that the decision is in fact because the forecasts improved and the fiscal deterioration is £20billion, not £30billion. In fact, as the OBR states, they have not changed since October 31. November 26 Rachel Reeves announces £30billion in tax rises in her Budget Economists point out that the spending is because of her policy decisions - increased public spending, particularly on welfare, and her decision to have more headroom - rather than because of a black hole in the public finances. They say the 'fiscal repair job' did not actually exist

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Andrew Neil

@afneil

7 months ago

This is getting quite serious for the Chancellor. In the run up to the Budget we were told that the OBR’s downgrading of productivity would create a multi-billon black hole. The government started preparing public opinion for a manifesto-breaking rise in income tax. We were not told that rising wages and inflation meant more tax revenues to offset the productivity downgrade. But Rachel Reeves was. By October 31 the OBR told Reeves that she was actually sitting on a £4.2 billion surplus. Yet four days later she gave a press conference in Downing Street at which she suggested that the watchdog’s forecasts were worse than expected and made the case for tax rises. “What I want people to understand ahead of the budget, is the circumstances we face,” she said. “I could … sweep those challenges under the carpet. I am being honest with people.” In fact, as we now learn, she was being the opposite of honest. She might not survive this.

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