Reeves Denies Misleading Public on UK Finances

Chancellor Rachel Reeves has denied misleading the public about the UK’s financial outlook ahead of her Budget, despite criticism over warnings of reduced productivity and tighter public finances.

sarah

Nov 30, 2025 - 18:01

Reeves Denies Misleading Public on UK Finances

Chancellor Rachel Reeves says she can be trusted with the country's finances and has been "clear" about the reasons for her decisions, following claims that she misled the public ahead of her budget.

Reeves was challenged to explain why she repeatedly warned about a downgrade in UK economic productivity estimates.

It has since emerged that the Office for Budget Responsibility (OBR) told her in mid-September that public finances were in better shape than generally believed.

When asked about the issue, she said she did not "believe" it was misleading and said she had been "clear" about all her plans last week and before the general election.

Conservative Leader Kemi Badenoch, who was also present on the program, said she was unhappy with the Chancellor's denials and called on her to resign.

The Conservatives have accused the Chancellor of using a "smudgeonly veil" to justify raising taxes, and Badenoch claimed Reeves had "lied to the public."

Downing Street has denied misleading the public, and Prime Minister Keir Starmer will support his budget decisions in a speech on Monday, saying the Chancellor's decisions will help address cost-of-living pressures and reduce inflation.

Beginning the interview, Kuenssberg asked Reeves if he could be trusted, and the Chancellor replied: "Yes."

Kuenssberg then cited what the Chancellor had said in a speech on November 4, when Reeves had indicated that there was less cash than previously estimated due to a productivity downgrade, and that he might need to raise taxes as a result.

Reeves explained that, despite what critics were saying, "I didn't have an extra £4 billion to play with," but rather, the OBR's figures had been reduced from £9.9 billion of headroom in the spring to £4.2 billion in the autumn.

She said, "I clearly couldn't deliver a budget with just £4.2 billion of headroom," as it would have been "the lowest surplus any Chancellor has ever had," and she would have "rightly" faced criticism for having too little headroom.

She said: "I was clear that I wanted to build that resilience, and that's why I made those decisions to increase that headroom to £21.7 billion."

When asked if she had exaggerated the situation to pave the way for a £16 billion increase in welfare, Reeves said she had to take into account policy choices made on welfare and the winter fuel allowance over the previous six months.

She said: "When they changed the policy just before the summer, I said we had to find the money in the budget, so I was very clear about that.

"Yes, I decided to scrap the two-child [Benefit] limit in the budget – which was funded by an increase in online gambling tax and a crackdown on tax avoidance and tax evasion, which was fully costed and fully funded, and which lifted half a million children out of poverty."

Being asked live on TV, "Did you lie?" is not an easy question for a Chancellor to face just days after delivering a truly impressive budget.

But this challenge was being made because Conservatives and others had alleged that Reeves had presented a misleading picture of the state of UK finances before the budget.

Reeves' stance was not to concede, insisting that the UK economy was weakened and that he had decided to raise taxes to save some money for a rainy day – to help financial markets In the hope that this would lead to lower interest rates.

When asked if she had broken the spirit, if not the letter, of her manifesto promise on taxation by freezing the income tax threshold, Reeves said: "I admit I didn't say that in the manifesto, but since then there has been a significant decline in productivity forecasts, and there has been significant turmoil around the world."

She added: "I have to answer for all of this because, if I had lost control of the public finances, we would have been punished.

"We would have been punished by the financial markets, which hold £2.6tn of public debt, and by higher interest rates, which would have impacted not just the country, but every business that borrows, and every household that has a mortgage."

Appearing on the same show, Badenoch said she was "not at all" happy with Reeves' explanation, saying he should have cut welfare spending instead, and called on the Chancellor to resign.

She said: "The Chancellor called an emergency press conference to tell everyone how bad the state of finances is, and now we've seen the OBR telling her the exact opposite.

"She was raising taxes to fund welfare – the only thing she didn't have funding for was the welfare payments she made, and she's doing it all on the backs of a lot of people who are working very hard and getting poorer – and because of that, I believe she should resign."