What was The Chancellor's biggest budget crime?

0:02Lewis Goodall:This is a Global Player original podcast. Beth Rigby, Sky News Prime Minister. We found out from the Office of Budget Responsibility that the Chancellor with your backing misled the public on November the 4th when she warned about a black hole in the public finances without telling us the second bit, that higher than expected tax receipts meant the economy was in a much healthier position than the Chancellor publicly suggested to all of us and to the country. A Cabinet Minister has told me this morning they do feel misled. How do you respond to that as Prime Minister? And can you really commit to driving through welfare cuts, given that some at your top table don't have confidence in you?

0:48Lewis Goodall:Thank you. Well, thank you very much, Beth. Look, there was no misleading. And I simply don't accept, and I was receiving the numbers, that being told that the OBR productivity review means you've got£16 billion less than you would otherwise have had shows that you've got an easy starting point. That is Keir Starmer, sounding bullish, proud of the budget, upbeat about what it's going to do for the British people. But the questions around Rachel Reeves are not going anywhere.

1:19Emily Maitlis:There are claims that she's a liar, even calls for her to go to prison. She might be bad at her job, but are we in danger of losing our collective mind over this? Welcome to The News Agents.

1:35Lewis Goodall:The News Agents.

1:36Emily Maitlis:It's John. It's Emily. And we're going to start by taking you through, very gently, step by step, what she is being accused of. A trigger warning, we will mention the OBR a couple of times, but we are not going to lose you in forecast for the entire episode, we promise. But essentially, why is Kemi Badenock coming out and calling Rachel Reeves a liar? Why are some columnists suggesting that she may have committed an offence which is worthy of prison? Well, because some ministers and certainly others in other parties have accused both Starmer and Reeves of misleading the actual cabinet by claiming there was a hole in the public finances big enough to justify tax rises.

2:23Emily Maitlis:She, remember, repeatedly highlighted this downgrade in productivity forecasts. What does that mean? It means that she kept on being told by the Office for Budget Responsibility that she had this big black hole. The argument is she was actually told by the OBR the black hole wasn't that big. She didn't need to make tax rises of the size that she did and that she nevertheless kind of hoodwinked the public into thinking that the state of the economy was so much worse that they would have to make major tax rises. And, you know, we're at a place today where even if she didn't break the manifesto pledge, she did make big tax rises.

3:05Emily Maitlis:So she is now being accused of lying, quite frankly, to the public, to her own cabinet, to the opposition parties, to parliament by the way she represented the state of our economy. And I guess we have to ask ourselves whether it is in the Chancellor's gift to decide what she wants to do as a Chancellor or whether she has to tell everyone every step of the way how bad things are and how much she's been told before she makes her policies up.

3:37Lewis Goodall:Look, if only the England cricket team has done as much pitch rolling as Rachel Reeves did, then we might not have lost the first test in Perth in two days, frankly, because honestly, it was an endless pitch roll that we were getting. It was misleading. It was confusing. It was contradictory. Some ideas were floated. Some ideas were taken down. Kites were put up into the sky and they were pulled back down again. The lead up to this budget was utterly chaotic and shambolic. But there are these two numbers and I'm only going to do two numbers. My trigger warning is only two numbers. One is that there were tax receipts that were four billion higher than had been anticipated.

4:16Lewis Goodall:That is where people said she didn't tell us about that bit. All she told us was about the productivity downgrade, which was worth a 16 billion black hole. So she was selective with the facts. isn't that what people do? Isn't that what you do in your preparing the groundwork for making your excuse about whatever it is you're going to do? And we have been utterly tough on Rachel Reeves and the way she has gone about this budget making process. And the whole business of government over these few weeks has been appalling. I mean, including, you know, the briefing that Keir Starmer would fight anyone who challenged him for the leadership.

4:55Lewis Goodall:The whole load of it has been abysmal. But I think that this bit of it is just, well, yeah, she was selective with the facts because she was trying to lay the groundwork for preparing an argument. And that is what politicians do in every budget. And so I know the journalists in the lobby, and I was once a lobby journalist, you know, slightly kind of, you know, their dander is high because they feel they've been misled because of that 4th of November news conference, that 10 past 8 news conference that Rachel Reeves held. But was it really that bad?

5:27Emily Maitlis:Well, let's hear the case against her from Kimmy Badenock. The Chancellor appears to have given wrong or false information deliberately to try and get her budget-based soft landing. We are at the Institute for Accounting. You all know that if a CEO had done this before their annual meeting, they would be sacked. What we see is issues around financial probity and market abuse. And I do believe that she should resign because of that, because she has given false information, broken promise after promise, given people false hope and false reasons to vote Labour, not been able to stick to them. What she's shown is that she cannot manage the economy.

6:06Emily Maitlis:So I think the CEO analogy is slightly misleading because obviously at the top of a company, you choose a very small coterie of people that you tell things to, and it won't be the entire management level. It won't be the entire cabinet. And I do understand if you're in the cabinet and you feel that you've been told to go out and suggest delicately in your media rounds that there might be a break to the manifesto, that they might have to raise income tax, which obviously would be that big break. But I also understand that actually before a budget, the Chancellor and the Prime Minister, and sometimes not even the Prime Minister, is told very specifically what is going to be in there.

6:51Emily Maitlis:And a lot of people are left out. And that is a horrible feeling. But actually, it is all market sensitive. She won't have signed off what she was going to do until two weeks before. And that was when she had to submit her numbers to the OBR. And I think there is another side to this, which we maybe could be in danger of missing, which is how absolutely furious Labour backbenchers are, the government is, with the OBR. The OBR, you'll remember, released the entire budget 52 minutes early on a website that they didn't think anyone would look at. That is absolutely without precedent. And there are people I know close to Keir Starmer who think that the head of the OBR, Richard Hughes, will be gone by tomorrow.

7:44We are going to see a report back on what happened later today.

7:49Emily Maitlis:Probably by the time you're listening to this, you'll have a better idea than we have now, recording just after one o 'clock. But the leaking of that report was something that I think the government is furious with. and they don't want to sort of, you know, dump on the OBR as a body, but they do feel that this is really egregious. And they're wondering, I think, in some quarters, whether part of this row is a deflection against what happened at, you know, 11.30 last Wednesday. Look, I've been saying quite a few times now on the podcast,

8:22Lewis Goodall:you know, there are questions about the future of the OBR itself and this having this outsized role in the political life of the nation where it has got so much power that it determines what a chancellor can and cannot do. And the other thing, just going back to the Kimmy Badenock point about, you know, a CEO would be fired for this. Yeah, but Rachel Reeves didn't give numbers when she was doing this. She was talking in generalities. I mean, that was the problem, quite frankly. Yeah, she was painting a picture in generalities. However, this is where I think it is serious, is that I think it just leads to a further erosion of trust in politics, in politicians, in the way we are governed, in the sense that they're just lying to you.

9:06Lewis Goodall:My own view is that I doubt many people have really tuned into the fine detail of what the element of misleading was and whether this would be prosecuted by a jury and hovering every fact and figure at their fingertips to make that judgment. I think people have zoned out. What I do think people feel is that people saw their taxes go up in the budget and they had been told that working people's taxes would not go up. It may not technically be a breach of the manifesto, but it sure as hell feels like it. If because of fiscal drag, you're now paying higher rate tax when you thought you wouldn't be or you're now paying income tax for the first time.

9:45Lewis Goodall:And the language that Rachel Reeves uses drives me bloody nuts when she says we're asking everyone to make a bit of a contribution. It's not Bloomin' Remembrance Sunday where someone's selling poppies outside Charing Cross station and you've got the option of whether you buy one or not. You have no option on any of this. You are being saddled with extra taxes.

10:04Emily Maitlis:So this, I think, is the dilemma right at the heart of the debate about whether she lied or not. the problem that the government has. And if you listen to their media responses, I've never heard each member being so hesitant. There are lots of ums. There are lots of ahs. There are a lot of people being very, very careful with their language. And I think it's because of this, that she has to paint a gloomy picture because essentially she knew she was going to have to raise taxes. She didn't break the manifesto pledge on paper. She didn't raise income tax, but she definitely did raise people's taxes.

10:45Emily Maitlis:And the reason that they raised people's taxes, frankly, was because they didn't succeed in any of the welfare reforms that they had tried to get across the board in the summer. In other words, it was her own party that let them down. It was her own party that created this particularly gloomy picture. So this is why it's of her own making. She doesn't want to break the manifesto, so it's not going to be a raise to income tax, which is the thing she trailed on the 3rd, 4th of November. She does still need to raise taxes because she hasn't got the welfare reforms through. So she has to paint a picture which is gloomy enough to justify raising taxes without saying we're raising taxes because of our previous failures.

11:32Emily Maitlis:That is, in a nutshell, why she's completely boxed in by her own problems.

11:38Lewis Goodall:Which leads us to Keir Starmer's speech today, where he's trying to make the argument that welfare reform is coming and this is a government that's going to pursue welfare reform. And you just think to yourself, really? Why would I believe that when you absolutely abjectly failed in the summer to get any welfare reform measures through, had to perform the most screeching U-turn because your backbenchers wouldn't buy what you were proposing? Is this a government that's capable of delivering welfare reform? Well, wait to see. But on present evidence, you would say no, they're not capable of delivering that welfare reform.

12:13Lewis Goodall:And the other thing is that, look, this is a Labour government. And Keir Starmer, you know, part of the reason he did the speech today was that he wanted to parade what they've done on freezing prescription charges, on freezing railfares on cutting people's energy bills by 150 pounds or 300 quid if you're poor and actually no one is listening to those kind of little baubles that have been given out people are much more focused on the big picture of what this budget means for them and yeah i'm sure there are going to be some people who will win a little bit of it but of course overwhelmingly the narrative is oh my god they promised they wouldn't come back for more last year they've come back for an extra 26 billion.

12:55Lewis Goodall:We're all going to be worse off. And I think that that is the central failure of the government communications. They want us to be thinking one thing. We're all thinking something different. So this is how Keir Starmer is trying to make the argument of what this government is about. The budget was a moment of personal pride for me. I do not want to see a country where children grow up in poverty. I don't think anybody in this country wants that. It is a fundamental British belief that every child should go as far as their talent will take them. And poverty is a barrier to that.

13:36Emily Maitlis:I mean, that's the irony, isn't it? That the thing that should have landed, best of all, was they're going to take hundreds of thousands of children out of poverty. And if they had got the welfare reforms done in the summer, I think that measure would have been cheered to the rafters. But because they didn't manage to do the first lot of welfare reforms, this somehow looks like another concession rather than a moment of triumph. And I guess to your point, you know, because Keir Starmer has clearly tied himself to his Chancellor there. He realises that he has to support her because, frankly, if she goes or is pushed, he's probably not long for the job either.

14:16Emily Maitlis:But I think what is in a way the kind of biggest, and I know we're always talking about sort of seminal mistakes and all the rest of it, but somebody was saying to me yesterday, when I was talking about this, there would have been no better opportunity, no better person, no better majority to come into government and say, we are going to do something radical, big, bold, we're a brand new party, a brand new face, a brand new majority. We could reform the whole tax system. We could push things through. We could do something incredible. And actually what's ended up happening is, I don't know if you saw, have I got news for you?

14:54Emily Maitlis:They mocked up this idea of a protest in the age of Keir. And the protesters run along going, what do we want? Incremental change. When do we want it? As soon as feasibly possible. And that's where we are today. So all these moments that should be big, taking kids out of poverty, whether it's cutting costs and making fuel more affordable all those moments should be big they actually feel lost in the sort of muddiness of compromise when 18 months ago they had the chance to you know they had the chance to be at league they had the chance to be bevan they had the chance to reset the whole shape of the state and the taxation and our relationship to it and somehow they didn't have the confidence to do it well i don't think they planned i just think

15:40Lewis Goodall:They're guilty of not having really prepared what they were going to do once they came into government. I think this is the most shameful part about it was that they had spent a lot of effort, rightly so, on planning an election campaign that would get them to power. But then they get to power and they've got their...

15:57Emily Maitlis:They're in power and they're still holding, clutching that Ming vase.

16:01Lewis Goodall:And they've got all these levers that they could pull, but they don't know what to do because they haven't thought through what it is they want to do. so I guess the other question is where does this leave Starmer and Reeves because I think you're absolutely right Emily I mean their futures are absolutely entwined like Japanese knotweed but I do think that actually removing one or the other I don't think Rachel Reeves is going to resign and I suspect the calls for her to go will subside but I think that you know not because there's any love for them in the Labour Party I just think it's bloody difficult 80 people would have to put their heads above the parapet it's not signed anonymously they'd have to sign their names and saying we want starmer out and unless the cabinet says we've got no confidence in either of you and i don't see that happening i don't see the mechanism by which you get rid of them in the short term maybe after the may local council elections it will feel different maybe then there'll be an urgency where the labor party as a whole will feel we've got to get rid of starmer we've got to get rid of Reeves.

17:03Lewis Goodall:But for the moment, they're going to stick to it and they're going to keep trying to do what they're doing, which is to sell this budget to a very, very sceptical public.

17:12Emily Maitlis:Yeah, I mean, if the question is, should she have painted a fuller picture as she made the final decisions? The answer is undoubtedly yes. But I don't think she even knew what that fuller picture looked like. I think that is, in a way, the tragedy of all this. One other thing, just before we leave this, I've been tipped off just while I've been sort of talking that we think the fca the financial conduct authority is going to look at whether the obr committed a criminal offence by that early leaking mistaken leaking whatever of the budget an hour ahead i mean we'll know more presumably when we hear directly from the fca we'll know more when we hear the response of the government to the obr but i think we should keep both those things in balance about who is trying to deflect what onto who at this point?

18:04Lewis Goodall:Well, in a moment, Venezuela. And is Donald Trump planning a little invasion of that country in South America?

18:20Lewis Goodall:The News Agents. So this weekend on X, Donald Trump posted the following. To all airlines, pilots, drug dealers and human traffickers, please consider the airspace above and surrounding Venezuela to be closed in its entirety. Thank you for your attention to this matter, President Donald J. Trump. And I read that and thought, oh, my God, there's an American invasion about to launch now. There's an aircraft carrier in the Caribbean ready to strike Venezuela if Donald Trump gives the order. And you think this must be it. And on Air Force One, Donald Trump was asked whether he'd spoken to the Venezuelan president, Nicolas Maduro.

19:03Lewis Goodall:And this is what he said. We'll translate it if you can't quite catch it at the end.

19:07Emily Maitlis:I don't want to comment on it.

19:13Lewis Goodall:The answer is yes.

19:14Emily Maitlis:Can you tell us a little bit?

19:15Lewis Goodall:No, I can't do that.

19:16Emily Maitlis:Did you say it went well?