Sir Keir Starmer is set to publicly endorse the government's Budget, while acknowledging the need to go "further and faster" on economic growth, as Downing Street defends Chancellor Rachel Reeves against allegations she misled the public about the scale of the fiscal challenge.
Scrutiny Over Deficit Claims
The Chancellor faces intense scrutiny during her Sunday media appearances over what she told both the public and financial markets about the state of the economy. This follows a growing controversy surrounding pre-Budget speculation that she faced a fiscal shortfall of up to £20 billion to meet her fiscal rules, partly due to downgraded productivity forecasts.
These rumours gained traction when Ms Reeves suggested in a speech on November 4 that tax rises were necessary because poor productivity growth would have "consequences for the public finances."
However, the Office for Budget Responsibility (OBR) revealed on Friday that it had informed the Chancellor as early as September 17 that an improved tax intake from growing wages and inflation meant the shortfall was likely smaller than first thought. The OBR further stated it told her in October that the deficit had been eliminated altogether.
Calls for Investigation and Government Defence
The OBR's disclosure has prompted opposition figures to urge the Financial Conduct Authority (FCA) to investigate whether the Treasury deceived the public.
Tory shadow chancellor Sir Mel Stride has reportedly written to the FCA asking it to look into "possible market abuse" arising from what he called "misleading" comments. Similarly, Stephen Flynn, leader of the Scottish National Party in Westminster, called for an "immediate investigation into the accusations of false and deeply misleading Budget briefings," questioning if Ms Reeves's speech amounted to "market manipulation."
Downing Street has firmly rallied around Ms Reeves. A source stated: "No 10 was aware of the content of the speech, which we believe entirely accurately outlined the need to raise revenues. The idea that there was any misleading going on about the need to raise significant revenue... is categorically untrue."
The source added that the OBR forecast had not accounted for increased spending from policies such as scrapping the two-child benefit cap and U-turns on winter fuel payments and welfare cuts.
Starmer's Growth Plan and Budget Support
In an effort to move past the controversy, Sir Keir will use a speech on Monday to throw his support behind the decisions taken by Ms Reeves and outline his long-term growth strategy.
He is expected to praise the Budget for tackling the cost of living, ensuring economic stability, and protecting public services. Sir Keir will confirm reforms to accelerate the building of nuclear power plants, after a government taskforce found that excessive regulation had made Britain "the most expensive place to build nuclear power."
Business Secretary Peter Kyle will be tasked with applying a similar deregulatory approach to major infrastructure projects and speeding up the implementation of Labour's industrial strategy.
Meanwhile, Ms Reeves is expected to promote the government's record £7.3 billion investment in local roads maintenance, aimed at helping councils fix potholes across the country.
