SIR Keir Starmer and Rachel Reeves were accused last night of misleading the Cabinet to justify tax rises in their Benefits Street Budget.
Senior ministers insist they were never told that the Office for Budget Responsibility had privately assured the Chancellor there was a £4.2billion surplus.
And they claim she had repeatedly highlighted a downgrade in productivity forecasts in meetings as she made the case for putting up taxes.
A Cabinet minister told The Times: “At no point were we told about the reality of the OBR forecasts.
“Had we been told, we might have been in a position to advise against setting hares running on income tax and giving the public the impression we are casual about our manifesto commitments.
“The handling of this Budget has been a disaster from start to finish.”
READ MORE ON RACHEL REEVES
Bruising interviews
Another minister added: “The argument about living in uncertain times and needing more headroom makes sense but the way she presented it — by saying there’s a big hole we need to fill — is frustrating.”
Amid mounting calls for Ms Reeves to quit, the PM has been forced into a panicked pledge to slash welfare.
Sir Keir will use a major speech to argue that the benefits system is “trapping young people out of work” and push for stripping out the “incentives” he says hold them back.
But the tough rhetoric comes only after a backlash over the Budget, which raised taxes on workers while funnelling billions more into welfare.
Reform UK boss Nigel Farage has urged the PM’s ethics adviser to look into whether the Chancellor has breached the ministerial code.
It demands ministers “give accurate and truthful information to Parliament” and are “as open as possible with Parliament and the public”.
Mr Farage accused Ms Reeves of “a sustained and deliberate narrative advanced across multiple platforms, after the OBR’s forecasts were known to the Treasury, and in circumstances where the existence of fiscal headroom was not being disclosed to Parliament or to the public”.
Almost one million extra people will be dragged into the higher income tax band after Labour chose to keep thresholds frozen, meaning a quarter of the workforce will pay 40 per cent tax by 2030.
At the same time, the Chancellor drove welfare costs sharply up by scrapping the two-child benefit cap.
More than 39,000 Sun readers have taken part in our online Budget polls — with 95 per cent of them saying Labour has wrecked the economy and 97 per cent thinking Ms Reeves should be sacked.
It is laughable to hear him say Rachel Reeves’ Benefits Street Budget has put the country on the right course
Shadow Chancellor Sir Mel Stride
On Friday, it emerged the OBR had privately told the Treasury that the public finances were in surplus before her decisions — not staring at a multibillion-pound “black hole” she used to defend her tax raid.
Despite that, she continued to claim she was plugging a gap in the nation’s books, a line central to accusations she misled the public. In a bruising round of Sunday interviews, the Chancellor insisted she did not lie.
She told broadcasters: “Anyone who thinks that there was no repair job to be done on the public finances, I just don’t accept that.”
She said the Budget was needed to build “more resilience, more headroom”, adding: “That’s what I did.”
On one show, Ms Reeves refused to meet Kemi Badenoch’s eye after the Tory leader had accused her of lying about the Budget.
The Chancellor looked away as she was stared down before their interviews on the BBC’s Sunday With Laura Kuenssberg.
On Sky, she defended raising taxes, saying: “In the context of a downgrade in our productivity, which cost £16billion, I needed to increase taxes. I was honest and frank about that in the speech I gave in November.”
The Tories have written to Sir Keir demanding Ms Reeves appear before MPs to explain herself, warning Treasury briefings about a non-existent black hole may require referral to the Financial Conduct Authority.
Meanwhile, Sir Keir will attempt to present his welfare pivot as part of a wider plan to “set the country on the right economic course”. He will claim the package will bear down on the cost of living with lower energy bills and frozen rail fares.
But Shadow Chancellor Sir Mel Stride said: “It is laughable to hear him say Reeves’ Benefits Street Budget has put the country on the right course and he wants to fix the welfare system.”
He said the her £26billion tax hikes “penalised people who work hard and makes them pay for those who don’t”. He added: “And she misrepresented why she was doing it, claiming there was a fiscal black hole.”
FIRMS EVEN GLOOMIER
By Martina Bet
BUSINESS bosses say the UK was already stuck in an economic slump — and the Budget has left them feeling even gloomier about the year ahead.
The Institute of Directors said its poll had revealed confidence was at the second-lowest level since the pandemic.
Its chief economist, Anna Leach, said 80 per cent of bosses viewed the Budget negatively and added: “Work remains to be done to lift the UK’s growth prospects.”
Before the Budget many businesses still expected sales to rise slightly — but afterwards far more feared revenues would fall. Optimism over the economy was stuck at a near-record low — moving from minus 73 to minus 72.
Plans to take on new staff also weakened, with hiring expectations sliding from -8 to -29 as businesses brace for freezes or job cuts.
Shadow Business Secretary Andrew Griffith said it had offered “little to reassure businesses”.
