Cathryn Rees

Ed Davey is already at London airport this morning ready to demand they pay their taxes before they can deplane. 😂

🚨 WATCH: Keir Starmer gifts Rachel Reeves pancakes for Shrove Tuesday

Latest absurd briefing coming out of No 10 tonight to save the Chancellor’s skin: OK so the OBR had told her she had a £4bn surplus rather than a black hole but that forecast had not factored in the cost of the winter fuel U-turn (£1.25 billion), the aborted £5 billion of welfare cuts and the £3 billion price of lifting the two-child benefit cap. Collectively they would have shown the chancellor was still £5 billion in the red. But that’s still a long way short of the £30 billion black hole she and the Treasury were spinning — plus these costs were all the consequence of government policy — conscious choices with spending implications. Reeves was claiming she had a black hole because of Brexit, poor productivity under the Tories and continued disruption of Ukraine invasion. That was why she had to put up taxes. And it wasn’t true. Taxes were going up give her a bigger fiscal buffer and because of her decision to increase spending.

This will be a tough weekend for the Chancellor. She knew almost six weeks before the Budget from the OBR there was no ‘black hole’. Yet she and the Treasury still stoked up the idea that there was — and it would take big tax rises to fill it. By Oct 31 she knew from the OBR there was actually £4bn headroom rather than a black hole. Yet still on Nov 5th she commandeered breakfast media to roll the pitch for big tax rises. Even by mid-November she was telling the BBC if Labour stuck to its manifesto commitments (ie no income tax rises) she’d need deep cuts to capital investment. None of what she said in the run up to the Budget was true. The Treasury select committee needs to ask her why she so misled the Parliament, the markets and the British people. She raised taxes to give herself some more headroom and to pay for yet another increase in (largely welfare) spending. The tax burden is going to all-time record level for a simple reason: the Labour manifesto said public spending would be around £10bn higher than Tory plans by 2028/29. In reality on the latest projections it will be £179bn higher!!! Nothing to do with filling in black holes.

After all the mayhem, the pre-budget briefings and Treasury hysteria about OBR growth downgrades, it turns out that if the chancellor had done precisely zilch yesterday, she would have almost met her main fiscal target, to generate a surplus on day-to-day spending. The miss would have been a rounding error £2bn. In fact, without her humiliating welfare u-turns - on disability benefit reforms and means testing the winter fuel payment - she would have hit that target by a slim £4.4bn. In other words the funding benefits of the £44bn of tax rises in last year’s budget were not wiped out by the Office for Budget Responsibility’s decision to downgrade its productivity and growth forecasts - for all the Chancellor’s very public frustration with that downgrade. Her fuss over the downgrade - which did happen, and which added £16bn to the deficit five year’s hence - was a red herring, a canard, a conjuror’s “look over there, not at what am I actually doing.” Because the OBR simultaneously calculated that the yield from existing taxes would fill that productivity induced hole almost twice over! So this was in no sense a fiscal and economic crisis budget. Her £26bn of tax rises were the Chancellor’s choice, not a necessity. For her personally and for her prime minister however there was a political crisis. Because they feared they were losing the confidence of Labour MPs and could lose the confidence of investors. So pretty much every penny of that £26bn in higher taxes had a political purpose - to placate MPs who wanted Starmer’s government to show more zeal in helping families on the lowest earnings, to cut energy, prescription and rail bills, and to prove to investors they are not red Liz-Trusses by adding £12bn to the headroom or buffer against future shocks. The big unanswered political question is whether placating Labour MPs and the mega investors is also addressing the nation’s priorities. On that hinges how Labour will perform in those important May elections, and whether the eviction of Reeves and Starmer is cancelled or merely delayed.