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
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.
@SW_Help when are you going to put on a service between Andover and Waterloo that has more than 3 carriages. Standing room only for the last week in both directions. Please provide details
@EvriDeliveryCom please could you let me know how to speak to someone in your team. I have tried every method, on line, email and telephone but get nowhere. Thank you
@SW_Help another day another train with broken seats and broken aircon - inside temp hitting high 30s. Morning service 3 carriages when there should be at least 6. Chronic overcrowding the norm. When are @SW_Help actually going to give a f**k about its customers
Another overcrowded ‘service’ from Waterloo tonight from @SW_Help. Cancellations yesterday; not enough carriages or trains today. Who can we complain to in order to get a semblance of a modern and efficient railway company. It’s pitiful.
@SW_Help 1753 Waterloo to Salisbury. No aircon as per usual, standing room only, as per usual. Planned overcrowding. If we were cattle this would be illegal.
@SW_Help on an overcrowded train from London to Frome. Been told can’t upgrade to pay full price to sit in First Class. at least 40 or 50+ people standing. Conductor announced there are only 5 seats free on the train so why can’t we pay to upgrade to empty seats?
@SW_Help He was having none of it. There was nothing he could do apparently. Supremely unhelpful and so we all stand whilst willingly wishing to pay to sit. Bonkers.
@SW_Help He said he can only do an upgrade at weekends for £10. I explained I wanted to pay the full upgrade price difference between my standard ticket and first class.