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Prime Minister Keir Starmer has sharply criticised the Office for Budget Responsibility after it accidentally released Budget analysis almost an hour early last week, calling it a "serious error" and "massive discourtesy to parliament". The incident has triggered a political firestorm that now threatens both the OBR's leadership and Chancellor Rachel Reeves's credibility.
An investigation report released on Monday concluded there was no intentional leak. But it recommended the OBR "change completely" how it publishes sensitive forecasts to "rebuild trust". The watchdog's head, Richard Hughes, now faces an uncertain future as pressure mounts from Downing Street.
Chancellor accused of misleading public
The leak has exposed a more damaging controversy for the government. Documents show the OBR told Reeves in September and October that public finances were healthier than expected - contradicting her public warnings of a massive financial crisis.
On November 4, Reeves held a surprise press conference warning of a "black hole" of up to £30 billion in government finances. She suggested major tax rises were inevitable and initially refused to rule out income tax increases.
But the OBR had informed the Treasury on October 31 - just days earlier - of a £4.2 billion government surplus. On September 17, the watchdog had already told Reeves that finances were better than anticipated.
Budget reveals £26 billion in tax rises
Last Wednesday, Reeves unveiled her Budget with £26 billion in tax increases. This included extending the Conservative freeze on income tax thresholds - a move that will push over 1.7 million workers into paying income tax for the first time or moving into a higher tax band.
Starmer told the Guardian he had considered breaking Labour's manifesto pledge not to raise income tax: «There was a point at which we thought, myself included, that we might have to reach for a manifesto breach of some significance.» He said the government ultimately avoided this after the budget process continued.
The OBR's productivity downgrade did reduce expected tax receipts by £16 billion. But Sky News economics editor Ed Conway stated on Monday: «In short: the reason the Chancellor raised taxes in the Budget wasn't due to an OBR downgrade. It was because of CHOICES.»
Political fallout intensifies
Conservatives have called for Reeves's resignation. An anonymous minister told The Times the Budget's handling was a «disaster from start to finish». BBC political editor Chris Mason stated Reeves had "misled" the country in the run-up to the Budget.
The government has closed ranks around the Chancellor. Darren Jones, chief secretary to the prime minister, told LBC: «The Budget received the full endorsement and support of the cabinet.» He insisted: «The chancellor didn't mislead anyone.»
Starmer defended Reeves in a Monday press conference, stating: «On the substance of the budget, I'd defend it any day of the week, they're the right steps for our country, and I'm proud that we've taken them.» But he acknowledged the OBR leak was a serious breach, calling it «market-sensitive information» released prematurely.
What happens next
The OBR investigation recommended potential solutions including moving its publishing to the government's independent subdomain or transferring publication of its two annual forecasts to the Treasury. These changes would require comprehensive overhauls of current arrangements.
The controversy raises questions about the relationship between the independent watchdog and the government it scrutinises. Starmer said: «I'm very supportive of the OBR. It is, in my view, vital for stability.» But the dual crisis of the accidental leak and the misleading allegations has created unprecedented tensions between Downing Street and the forecaster.
Note: This article was created with Artificial Intelligence (AI).
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