Reeves Faces Scrutiny Over Budget Tax Row as Treasury and OBR Tensions Mount

Rachel Reeves, the Chancellor, is under mounting pressure after accusations that she misrepresented the state of the UK’s public finances ahead of her £30bn tax measures, prompting demands for her resignation. The controversy intensified after the Treasury’s most senior civil servant, James Bowler, approved the publication of a letter indicating that the fiscal shortfall was significantly less severe than previously suggested.

Senior figures at the Office for Budget Responsibility, OBR, disclosed that the Treasury had foreknowledge of healthier fiscal headroom when deciding the new tax approach. The OBR’s letter, which was released last Friday, revealed that Ms Reeves had been informed her margin for economic manoeuvre was around £4bn, only a modest reduction from the £10bn reported in the spring. The revelation questions Ms Reeves’s justification for breaking manifesto tax promises and leverages speculation over whether the Treasury orchestrated a misleading narrative for political cover.

Evidence presented to the Treasury Select Committee by members of the OBR underscored growing concerns regarding irregular communications and leaks preceding the Budget. Two committee members, Professor David Miles and Tom Josephs, asserted that such leaks exacerbated economic uncertainty and could impair national growth prospects. These developments have amplified scrutiny on both the Chancellor and the Treasury’s handling of sensitive fiscal information.

Internal tensions surrounding the decision to publicise the OBR’s communications have been downplayed by Treasury insiders, who affirm Ms Reeves authorised the disclosure in alignment with OBR principles. However, remarks from Ms Reeves’s team emphasised the need to safeguard the confidentiality of Budget discussions, suggesting unease with the precedent set by the letter’s publication.

Calls for formal inquiries have arisen from both political opponents and independent observers. Sir Mel Stride, acting as shadow chancellor, has urged Mr Bowler to launch an investigation into the sources of the Budget leaks, stressing the potential damage to the integrity of the fiscal process. Nigel Farage of the Reform party has questioned the government’s response time to his own demands for scrutiny, declaring that public trust now requires transparent answers.

Amidst the controversy, Andrew Bailey, Governor of the Bank of England, reiterated the significance of the OBR’s independence and the core role of impartial fiscal forecasting. Both the OBR’s ongoing disclosures and the Treasury’s reaction reflect a sector under intense examination, with the management of information now a focal concern for maintaining market confidence and public accountability.