Has Rachel Reeves been economical with the truth? – The Latest

0:00This is The Guardian.

0:08I think it's fair to say that the overall impression created by the government was misleading. I needed to increase taxes and I was honest and frank about that in the speech that I gave at the beginning of November. The Chancellor has been accused of telling fibs about the state of the economy and the run-up to her budget and now Keir Starmer has come out swinging to defend her. I didn't want to reach the manifesto and that's why we came to the decisions that we did. But has voters' trust been permanently damaged? From the Guardian's Today in Focus, this is The Latest with me, Lucy Hall.

0:45Well, to help answer that, I'm joined by Archie Bland, Head of National News. Thanks for being with us, Archie, and thanks for joining us for our first launch episode of Today in Focus. Very excited to be here. Thank you. It's great to have you. So, Kirsten Mert this morning speaking in London. And this was supposed to be a kind of big bells and whistles celebration of all of the positive things that the government was able to do in its budget last week. So reducing child poverty, freezing railfares, bringing down people's energy bills. But that is not quite what occurred, was it? No. And probably part of the problem here is that Starmer needed to make this speech at all.

1:18It's kind of a signal that perhaps the budget hasn't landed exactly as they would have liked and that they are trying to reassert control over the narrative. because they want to be talking about growth, about what they're doing on child poverty, on all those things. They don't want to be talking about a long and complicated route about the OBR. But I'm afraid we're going to talk about that instead. Yeah, it is both long and sadly complicated. So this dates back to the start of last month when Rachel Reeves did this slightly unusual, quite strange breakfast time press conference where she stood up just after eight o 'clock in the morning.

1:51The tone being quite grave, it was like the forecast much worse than expected. we're going to have to put up your taxes. Sorry, everyone, but brace yourselves for hard things to come. But that wasn't quite what she'd been told, as we now know, right? Without wanting to drown people in the detail, the OBR is responsible for the forecasts that give a measure of how much fiscal headroom Rachel Reaves is going to have, and essentially how much she has to play with as she makes her budget decisions. When she made that announcement about tax, or hinting at the possibility of tax rises, she very much made it sound like the OBR had just come up with unalloyed bad news on the basis of a productivity downgrade that meant that she had less room to play with than she would have liked.

2:31And so she had no choice but to do this. Later, when they U-turned on that possibility of income tax rises, they said, good news, the OBR has told us that, in fact, there have been higher tax receipts than expected. And that means we're able to make this different policy choice. In fact, they already knew about that improved outlook on tax receipts when she made that breakfast press conference. And so the weird thing about this is what it feels like has happened is that instead of kind of owning these policy choices for what they are, and they're quite reasonable ones, saying that actually we need to have more fiscal headroom so that we aren't so much at the mercy of the markets and we want to do things on child poverty and other labour priorities.

3:10They've instead kind of tried to blame it on the OBR instead. And that has amounted to something that does now look quite misleading. Yeah, and so Rachel Reeves has been grilled on this over the weekend, hasn't she? How has she tried to defend herself? Well, she's made some very reasonable points. And one important thing to say is that when people said, oh, she's lied to us, she didn't need to do this, actually she had£4 billion in surplus. A£4 billion surplus is a really small amount historically. It would have been the smallest ever surplus that a Chancellor would have announced at a budget when George Osborne made his austerity cuts, he had a 90 billion surplus, to give you a sense of the kind of scale that we're talking about here.

3:49And that leaves you very little wiggle room. What she doesn't have such good answers on and where she begins to sound a bit waffly, and honestly, I started to struggle a bit to follow the precise detail of what she's saying, is why she made it sound like the picture was so bad when in fact she already had some slightly better news. And I don't think Labour have really put together a very solid answer on that. The one other thing I would say is that always before budgets, There's a lot of briefing from the government that is designed to present the picture in the most advantageous way politically possible.

4:19This does feel like it's a bit of an advance on what is typical, but it's also reasonable to say that anybody who thinks that we're just getting a straight down the line view from the government is probably a bit deluded. So we're speaking just after one o 'clock on Monday. There's due to be an urgent question for Reeves in the chamber or that we understand that she's not going to be around to answer that. But I mean, this has just been a real gift to both the Tories, to reform, to the right wing press, hasn't it? This allegation that Reeves was somehow dishonest, that she lied. To what extent do you think that type of allegation is valid?

4:56I mean, I think genuinely we always ought to be quite careful about the word lie. It implies a very clear decision about being frankly misleading. And, you know, a lot of this is based on background briefing from anonymous sources. It's hard to say that Rachel Reeves is directly responsible for that. I think it's fair to say that the overall impression created by the government was misleading and that Rachel Reeves played a central part in that. Whether it rises to the level that the Tories and reform would like it to of an ethics breach or of something which the financial conduct authority need to look at is a different question.

5:29The argument in favour of it is that people will have made financial decisions on the back of the pre-briefing about the budget and that that is materially significant. But there's a really high bar for the FCA or for the Prime Minister's ethics advisor intervening on these things because a lot of it is just in the general warp and weft of politics. And every decision politicians take about how to describe what they're doing has some degree of presenting it to their best advantage. But I think it's a stretch to say that those bodies are likely to get involved. But we'll see. But as you indicated there, I mean, this was about political choices, wasn't it?

6:04When she stood up that morning in early November, she was trying to make the argument for why she needed to raise people's taxes. What we didn't know then that we know now is that there would be an increase of 16 billion into welfare spending. So this is playing out in the right wing press. Not only did the Chancellor lie to you about this, but she did this in order to fund higher welfare. and that's where that political argument needs to be made with more fortitude, doesn't it? And doesn't seem to be doing so. Was Starmer trying to do this this morning and if so, to what degree was he successful, do you think?

6:36I think a bit, but he was also trying to set the message that they're going to bear down on excessive welfare spending. So I don't think it was a kind of unalloyed defence of the value of lifting children out of poverty, although they have tried to make that in recent days. I think many critics to the left of the Labour government, to voice the other view here. We'll also go back to the manifesto pledge not to raise taxes on working people. And they will look at where we are now, where through fiscal drag, by basically allowing people to kind of go into new tax brackets without increasing the taxes per se, there is a kind of a probable manifesto breach, but it's a technicality.

7:16I think that case like this one is an example of where if the government had got on the front foot and made the kind of positive case for needing to make an increase to taxes then or of wanting to remove the two-child benefit limit now, they would be in a much better place because instead of arguing about whether they were honest or not, they would be arguing about the benefits of their policies. Do you think that this compounds a sense that the public has already made up their mind about the Starmer Reeves project, that there is a lack of trust in what they say they're going to do versus what they end up doing, whether it's on winter fuel, whether it's on child benefit, whether it's on raising your taxes directly or indirectly.

7:56This just plays into all of that and makes that story very difficult to avoid, doesn't it? That's how it feels right now. Certainly the polling since the budget hasn't been particularly positive for Reeves. We should say that that's not her only audience here. She's also very concerned about the markets and about the bond markets and about whether it's going get more expensive for the UK to borrow on the back of her budget. And she will feel that she has successfully averted that risk for now. She's also concerned about Labour MPs and whether they're going to attempt to defenestrate her and perhaps the Prime Minister.

8:26She will also feel that she has deferred that risk at least. But it does feel like a risk deferred rather than one that has been completely removed. And I wouldn't say that the public will judge the government on the basis of this budget alone and that therefore she's finished. There may, for example, be interest rate cuts before the May elections. But I would say that if they don't get on the front foot and start to see a more positive growth outlook, which is what they said was their priority, then come the May elections, she and Keir Starmer could be in real trouble. Well, Archie, we'll check back in with you soon.

9:00Thank you so much for your time. Thank you. That's it for today. Thanks for listening to our first episode of The Latest. We'll be dropping into your feeds every weekday evening with what you need to know about the story everyone's talking about in around 10 minutes. Please do give us a watch over on YouTube as well. And don't miss tomorrow morning's episode of Today in Focus, which is a deep dive into the first Your Party conference, the new venture from Jeremy Corbyn and Zahra Sultana. Spoiler alert, it didn't go smoothly. This episode was presented by me, Lucy Hoff. It was produced by Ryan Ramgobin and Eli Block.

9:33The executive producer was Zoe Hitch. The latest will be back with you tomorrow evening. Thanks for listening. This is The Guardian.