Chancellor Reeves defends financial decisions amid misleading claims
In an interview, Reeves rejected the claim that her statements were misleading. “I do not accept that I misled anyone,” she said, insisting that she had been upfront about the situation.
“I have always been clear about my plans, both in the past week and ahead of the general election,” she added. The chancellor emphasized that her aim was to increase the country’s financial resilience, and she defended her decision to raise taxes as part of her efforts to ensure the budget was adequately funded.
Conservative leader Kemi Badenoch, also appearing on the program, strongly criticized Reeves’ handling of the situation. Badenoch accused the chancellor of using the situation as a “smokescreen” to justify tax hikes and called on Reeves to resign. The Conservatives have long claimed that Reeves’ warnings about the UK's financial situation were exaggerated, particularly in light of the OBR's more optimistic outlook.
Reeves addressed concerns raised by Badenoch and other critics, explaining that despite the more favorable figures from the OBR, the £4.2bn (USD 5.6 billion) of headroom left after the autumn downgrade was insufficient for delivering the Budget. “I could not deliver a budget with just £4.2bn of headroom,” she said, highlighting that the situation would have left her open to criticism for presenting a budget with such a small surplus. She justified her decision to increase the headroom to £21.7bn (USD 29 billion) as necessary for long-term stability.
Reeves also responded to questions about her decision to increase welfare spending by saying that some of the additional funds were needed to cover policy commitments made earlier in the year. Specifically, she pointed to the £16bn (USD 21.5 billion) increase in welfare, which was partially funded through higher taxes on online gambling and efforts to tackle tax avoidance and evasion.
On the issue of freezing income tax thresholds, Reeves acknowledged that this was not part of the Labour Party’s manifesto but defended the move by citing the significant global economic challenges and a downgrade in the UK's productivity forecast. “If I were to lose control of the public finances, we would be punished—by financial markets, by higher interest rates, and by the people of this country,” she argued.
Badenoch, however, remained unimpressed with Reeves’ explanations. She accused the chancellor of raising taxes to fund welfare payments that were unfunded, stating that the only “unfunded” aspect of the Budget was the welfare increases. She also accused Reeves of attempting to manipulate the market ahead of the Budget and called for an investigation by the Financial Conduct Authority.
Despite the ongoing criticism, Prime Minister Keir Starmer has expressed full support for Reeves' handling of the Budget, with Downing Street rejecting any claims that she misled the public. Starmer is expected to back Reeves’ decisions in a speech on Monday, emphasizing that her actions were necessary to address the cost of living crisis and reduce inflation.
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