Writing on the Wall for Labour Govt

Fresh allegations from inside the Cabinet have rocked the Labour government this weekend. Senior ministers are openly accusing Sir Keir Starmer and Rachel Reeves of misleading their own colleagues to justify the tax rises in last month’s Budget. According to reports in The Times, the Chancellor repeatedly painted a picture of dire public finances while privately knowing that the forecasts had already improved.
Ministers say Reeves hammered home a downgrade in productivity forecasts in a string of Cabinet meetings to make the case for higher taxes. At one particularly tense gathering on 4 November, just days after she had publicly hinted at breaking Labour’s manifesto pledge on income tax, she warned colleagues about “tariffs, unstable borrowing costs, inflation and long-term productivity”. She told them she “had to respond to the world as it is now, not as she might wish it to be”. Many left the room convinced that only a manifesto-shattering tax rise could save the day.
What they did not know was that the Office for Budget Responsibility had already told Reeves, on 31 October, that higher-than-expected tax receipts had more than wiped out the downgrade. She actually had a £4.2 billion surplus. That crucial detail was kept from the Cabinet and the public. Only Reeves and the Prime Minister were in the loop. A week later the plan to put 2p on the basic rate of income tax was quietly dropped.
One Cabinet minister told The Times: “Why did Keir and Rachel allow the country to believe for so long that we would break our manifesto by putting up income tax by 2p when they would have known that wasn’t true?

“At no point were the cabinet told about the reality of the OBR forecasts. Had we been told, we might have been in a position to advise against setting hares running on income tax and giving the public the impression we are casual about our manifesto commitments. The handling of this budget has been a disaster from start to finish.”
Another senior figure described the Treasury operation as far from cutting-edge and called the whole episode “hokey-cokey” over income tax. A third simply said Starmer and Reeves now look “weak and incompetent”, though they added grimly that this is “par for the course”.
On Sunday Reeves went on the defensive with Laura Kuenssberg on the BBC. She insisted “That [the £4.2 billion surplus] would have been the lowest surplus that any chancellor ever delivered against the fiscal rules. I was clear I wanted to build up that resilience, and that is why I took those decisions.” She confirmed that Starmer had been fully briefed throughout, describing the two of them as “a partnership”.
The OBR itself broke cover on Friday, releasing the pre-Budget numbers to counter claims of a giant black hole. Its chairman, Richard Hughes, will face MPs this week amid separate calls for his resignation after the Budget was accidentally published 52 minutes early.
Opposition parties are circling. Nigel Farage has written to the Prime Minister’s ethics adviser demanding a formal investigation into “potentially serious breaches of the ministerial code”. An urgent question is expected in the Commons.
Ministers admit they still do not fully understand what happened. One told The Times: “I just don’t understand what has gone on, I genuinely don’t. We’re all hoping to find out more this week.”

When a Chancellor is accused by her own colleagues of misleading the Cabinet, when the Prime Minister is implicated alongside her, and when the opposition smells blood, it is hard to escape the feeling that trust has been badly damaged. For Keir Starmer and Rachel Reeves, who staked their reputation on competence and straight-talking, these are dangerous moments. Many in Westminster are already asking whether the writing is on the wall.