Steven Swinford@Steven_Swinford
EXCLUSIVE
Keir Starmer and Rachel Reeves have been accused of misleading the Cabinet by using claims that there was a black hole in the public finances to justify tax rises during the run up to the Budget
One Cabinet minister told The Times: “Why did Keir and Rachel allow the country to believe for so long that we would break our manifesto by putting up income tax by 2p when they would have known that wasn’t true?
'At no point were the Cabinet told about the reality of the OBR forecasts. Had we been told, we might have been in a position to advise against setting hares running on income tax and giving the public the impression we are casual about our manifesto commitments. The handling of this Budget has been a disaster from start to finish'
Another senior minister said: 'The Treasury’s operation is not exactly cutting edge. The argument about living in uncertain times and needing more headroom makes sense but the way she presented it - by saying there’s a big hole we need to fill - is frustrating. We had this hokey cokey about income taxes going up and then not going up'
Another minister said Starmer and Reeves look 'weak and incompetent' in the wake of the budget but described it as 'par for the course'
The chancellor repeatedly highlighted a downgrade in productivity forecasts in a series of Cabinet meetings as she made the case for raising taxes
It included a meeting on November 4 that was held after a Downing Street press conference which she used to heavily signal that she was preparing to break Labour’s manifesto and raise the basic rate of income tax
Reeves told Cabinet that Britain faces challenges' in the form of tariffs, unstable borrowing costs, inflation and long-term productivity'. She said she “had to respond to the World as it is now, not as she might wish it to be'
Ministers emerged from the meeting convinced that the public finances were in such a dire state that a manifesto-breaking increase in the basic rate of income tax was necessary.
In fact the Office for Budget Responsibility had already informed her privately that the downgrade in the public finances had been more than offset by higher than expected tax revenues
It told Reeves on October 31 that she had a £4.2billion surplus, but the information was not shared with the Cabinet or the public. Only she and Starmer were aware of the improvement in the forecasts. They abandoned the plans to increase the basic rate of income tax a week later amid concerns about a political backlash
thetimes.com/article/714550…
