Reeves will be lucky if the only punishment for this shameful deceit is the loss of her job: DAN HODGES
This morning, there’s a debate raging about whether Rachel Reeves can survive the revelation that she deliberately lied to the voters, the markets and Parliament over her £26billion Budget hammer blow to the working people of Britain. But that’s the wrong question.
The real issue is whether the Chancellor will have to resign, or if she’s heading to jail.
The facts are uncontested. On September 17, Reeves was handed some good news. The Office for Budget Responsibility (OBR) informed her the £20billion budget black hole she believed she was facing had actually shrunk to £2.5billion, as a result of changes to real wages and inflation.
Yet for some inexplicable reason, she ignored the new positive forecast. On November 4, she delivered a bizarre ‘scene-setting’ speech in which she produced a chilling analysis of the nation’s finances.
‘It is my job to deal with the world as we find it,’ she said, ‘not the world as I would wish it to be. Not to commentate or speculate. But to act.’
Immediately afterwards, her aides explained this meant income tax was going to have to rise. Then Reeves panicked. In the face of opposition from her own backbenchers – and with Labour‘s focus groups showing a potentially existential backlash against a manifesto breach – it was hurriedly announced the basic rates of tax would not be raised after all.
At which point, the markets moved. Confronted by the Chancellor’s clear loss of nerve, yields on government bonds soared, ratcheting up the already mountainous government debt.
Someone inside the Treasury hurriedly picked up the telephone to Alex Wickham, a journalist for the financial and political news service Bloomberg, and briefed him that the OBR forecast (at that time, still highly confidential) had given the Chancellor more financial room for manoeuvre.
The decision to drop the hike in tax rates was an economic, not political, decision they insisted. So Reeves lied. And then lied. And then lied. And then lied again.
She insisted during the election she would not raise taxes on working people. In last year’s Budget she underlined that pledge, saying: ‘I have come to the conclusion that extending the threshold freeze would hurt working people.’
A few days later, she tripled down, saying: ‘Public services now need to live within their means because I’m really clear, I’m not coming back with more borrowing or more taxes.’
Then she decided public services wouldn’t have to live within their means after all. The tax threshold freeze would be extended. Taxes on working people would rise. And, as we now know, the explanation given for those rises was a complete fiction as well.
So Rachel Reeves didn’t just lie. She lied about raising taxes. She lied about raising them on working people. And then she lied about the very reason for her lying.
But that’s not where the perfidy ends. As the OBR confirmed, the Chancellor was not dealing with the world as it was. She deliberately distorted the fiscal picture to justify her tax raid.
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