Prime Minister Keir Starmer has denied accusations that Chancellor Rachel Reeves misled the cabinet or the public over the state of the public finances ahead of last week’s Budget, after a fresh row erupted between the Treasury and the Office for Budget Responsibility (OBR).
Speaking at a nursery in London, Starmer defended Reeves’ tax rises and her decision to scrap the two-child benefit cap, despite weeks of speculation over possible income tax hikes. He insisted that revenue-raising measures were unavoidable and dismissed allegations that the government exaggerated the scale of its fiscal challenges.
“There was no misleading,” he said. “It was inevitable we would always have to raise revenue. I was clear we needed more headroom.”
His comments follow criticism of the Treasury’s pre-Budget handling after Reeves repeatedly signalled that income tax rates might be raised — a position later abandoned. Reports suggested the Treasury believed there was a £30bn shortfall in fiscal headroom, a figure now disputed by the OBR.
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