The Chancellor delivered a series of extraordinary grim warnings about the state of the Government’s books in the run-up to the Budget.
She flagged that the Office for Budget Responsibility was downgrading productivity, as well as blaming everything from Brexit to Tory austerity and Donald Trump for a “worse than expected” outlook.
Ms Reeves even delivered a highly unusual ‘scene setter’ speech in Downing Street on November 4th hinting that she would have to breach Labour’s manifesto promises not to increase income tax.
And six days later she gave an interview to the BBC in which she insisted that the only way to balance the books without an income tax hike was to cut “capital spending” – something she made clear she was not willing to do.
However, a bombshell letter from the OBR to the Treasury committee has now laid bare that Ms Reeves has known since September that revisions to tax revenues had almost completely offset a £21 billion productivity downgrade.
By October 31st the watchdog said it had informed Ms Reeves that she was in fact meeting both her fiscal rules without the need for any action – giving her more than £4 billion in headroom.
In the event the Chancellor announced an eye-watering £30 billion package of tax rises on Wednesday, a large chunk of which went on benefits rises that had been demanded by mutinous Labour MPs.
She had already U-turned on the hints of income tax rises – if they were ever seriously considered – but only after the fact they were not happening was leaked to the Financial Times.
The dramatic revelation sparked fury, with the Chancellor accused of “deliberately misleading” the public and markets...<<<Read More>>>...