Sir Keir Starmer, leader of the Labour Party, vigorously denied that his chancellor, Rachel Reeves, deceived the public. It is ironic therefore, that this denial should appear a matter of days before the recent Budget statement about the country’s finances. In a news conference at Downing Street on November 4th, Reeves warned of worsening productivity. He noted that this drop would devastate public finances and pose tremendous risks to tax receipts. Despite the pushback, Starmer defended Reeves, claiming that no one was misleading in comments leading up to the Budget.
The Office for Budget Responsibility (OBR) even disclosed that it had warned the Treasury before the chancellor’s press conference. They argued that even if productivity did decrease, increased wages would more than make up for this and eventually increase government tax revenue. On that point, Starmer was clear that this should have informed the public debate about the Budget.
Starmer had to address worries about the government’s fiscal credibility. He said that revised down economic productivity forecasts showed a £16 billion black hole against previous projections. He insisted that the Budget decisions were crucial and fair. They prioritized addressing long-standing problems such as high and rising levels of child poverty and a growing cost-of-living crisis.
“Against that backdrop it was inevitable that we would always have to raise revenue.” – Sir Keir Starmer
During that same news conference announcement, Reeves didn’t provide specifics on what reforms might look like. He did mention two reviews currently under way aimed at “Neets”, shorthand for young people not in education, employment or training. The dearth of specificity about what’s in store going forward was met with sharp pushback from opposition leaders.
Kemi Badenoch, the Conservative MP for Saffron Walden, went in hard. She explained that if Reeves had any hand in spinning briefings on the state’s grim economic prospects, she should be held accountable. Badenoch accused Reeves of trying to characterise the UK’s economic prospects too pessimistically, calling it a “smokescreen” to cover the need for tax rises. She stated that some people took irrevocable actions on their pensions. In addition, they adjusted their mortgages out of concern for expected tax hikes.
“Some people drew down their pension, something that is irreversible.” – Kemi Badenoch
Badenoch’s remarks came in the wake of Labour’s latest commitment to not increase income tax rates. So far, Reeves has done the opposite, especially with what she said about the federal government’s budget approach. Starmer confirmed for the first time that there was a point when the government believed it might need to breach its manifesto pledge on taxes.
“I didn’t want to breach the manifesto, and that’s why we came to the decisions that we did.” – Sir Keir Starmer
Starmer expressed pride in the Budget’s proposals, stating they reflect the government’s commitment to making difficult but necessary choices for the betterment of society. He claimed to have no doubt the Labour party would do better than the OBR’s growth forecasts for the economy.
“It was a moment of personal pride.” – Sir Keir Starmer
As discussions surrounding the Budget continue, Starmer has reiterated that Labour is focused on addressing economic challenges while maintaining its core commitments made during last year’s election campaign. He stuck to his story of a government dedicated to transparency and fiscal prudence even in the face of continued criticism from the other parties.