Reeves accused of forcing OBR chief to quit after watchdog revealed truth about Budget black hole
Sign up to our free Brexit newsletter for our analysis of the continuing impact of Brexit on the UKSign up to our free newsletter for the latest analysis on Brexit's impactSign up to our free newsletter for the latest analysis on Brexit's impactRachel Reeves has been accused of forcing the chair of the UK’s Budget watchdog to quit after he revealed that claims she made about the public finances were false.Tory leader Kemi Badenoch told Prime Minister’s Questions that Richard Hughes, the former chair of the Office for Budget Responsibility (OBR), was “forced out for telling the truth” after the chancellor had “twisted the facts” on the Budget black hole.It came as chief Treasury secretary James Murray confirmed that the department is holding an inquiry into multiple leaks ahead of the Budget, which leading economists told the Treasury Select Committee were “harmful” to the UK and threatened to “drag down its reputation” internationally.Mr Hughes quit on Monday over the leaking of Budget details 40 minutes before it was delivered last week, after an investigation found a long-standing systematic problem within the organisation.open image in galleryThe details of Rachel Reeves’s controversial Budget were leaked 40 minutes before she officially announced it (PA)But Sir Keir Starmer was forced onto the defensive on the issue in the weekly exchanges at PMQs.Ms Badenoch said: “We now know that the head of the OBR was forced out for telling the truth that the chancellor did not need to raise taxes on working people. We also know that the chancellor was briefing the media, twisting the facts, all so she could break her promises and raise taxes.“If she was a CEO, she would have been fired and she might even have been prosecuted for market abuse. That’s why we’ve written to the Financial Conduct Authority, so will the prime minister ensure the chancellor fully cooperates with any investigation?”To laughter from Labour MPs, Sir Keir replied: “She’s completely losing the plot.”The prime minister later added: “May I pay tribute to Richard Hughes for his leadership of the OBR? He made very clear why he stepped down and I’ve made very clear my support of the OBR.open image in galleryKemi Badenoch accused Reeves of ‘briefing the media’ and ‘twisting the facts’ of her Budget in PMQs (House of Commons/UK Parliament)“But she says ‘take responsibility’ – under this chancellor, growth is up this year, defeating and beating the forecast, wages are up more since the general election than in 10 years of the Tories, we’ve had, I think, five interest rate cuts, NHS waiting lists are down, we’ve had record investment into this country.“We’re turning the page on their austerity.”However, Ms Reeves, who sat stony-faced next to the prime minister during the exchange, fled in a hurry before her shadow, Sir Mel Stride, asked an urgent question on the resignation.Instead, she left her deputy, Mr Murray, to respond to questions as pressure continues to mount on her position.The row has been linked to an unprecedented press conference Ms Reeves gave ahead of the Budget, where she appeared to suggest income tax would need to be raised because of a Budget black hole. open image in galleryThe OBR has revealed that ahead of her Budget the chancellor knew there was not a black hole (PA)But the OBR later revealed that it had already informed her that higher-than-expected tax receipts had left her with a £4bn surplus.Sir Mel said: “The circumstances surrounding [Richard Hughes’s] resignation are still unclear”, adding that it was “a useful distraction for the chancellor”.He noted that Mr Hughes had taken “the unprecedented step” of publishing details of the pre-Budget discussions “because the OBR was concerned about partial leaks about their forecasts”.He demanded to know whether “any pressure was put on to Mr Hughes to resign”.Mr Murray said that the letter by the OBR on the full details of its pre-Budget briefing had been approved for publication by Ms Reeves.He said: “The decision for Mr Hughes to resign was a matter for Mr Hughes for himself” and the minister insisted that the government “is completely committed to the OBR’s independence”.Later in the exchanges, he was reminded that a previous chancellor, Hugh Dalton, resigned in 1947 for inadvertently leaking a single sentence of the Budget ahead of its announcement.Later, economists from some of the UK’s leading think tanks warned that “unprecedented” government briefings on the Budget in the months leading up to the formal announcement threatened to harm the UK’s reputation.Prof Tera Allas, from the Productivity Institute, warned the briefings threatened to “drag down the reputation” of the UK if the pattern continued.She added: “What I would add is, in terms of consumers and businesses, who are ultimately the actors in the economy that drive growth or don't, it has been harmful to have such a long period of speculation.”Ruth Curtis, who heads the Resolution Foundation and used to work for the Treasury, said: “The amount of speculation and pre-briefing in the run-up to this Budget was unprecedented and unhelpful, and I hope that we do have the opportunity to reflect on that and think about what we might change in order to improve the UK's fiscal framework.”Helen Miller, director of the Institute for Fiscal Studies (IFS), was particularly critical of the pre-Budget speech Ms Reeves gave, where she has been accused of misleading the public and markets.Ms Miller said: “[The briefings] were concerning for a whole range of reasons, not just because the market might move, but because firms and individuals are holding back their decision making.“Rachel Reeves herself gave a speech on national television, and I think what that actually meant, [was] it wasn't the clearest communication from my mind, because nobody quite knew quite, I think, what the chancellor was quite trying to indicate there.”
