Ben Chu

Did Rachel Reeves and the Government “mislead” people about the state of the public finances and the need for tax rises before the Budget?

I think this is a rather complex question & the answer is not black and white.

A thread…🧵1/12

What’s happened to resident doctors’ pay since 2008? Resident doctors in England say pay is at the core of their dispute with the government, but what’s actually happened to their pay over the past 17 years?

People who heard the 8.10am Radio 4 Today interview with Dr Tom Dolphin of the BMA this morning might be interested in this explainer:

📺 👇

What's happened to resident doctors' pay since 2008?

www.bbc.co.uk/news/videos/...

Andreas Whittam Smith death: Co-founder of The Independent, dies aged 88 The editor and media entrepreneur changed the landscape of British journalism over his decades-long career

Very sad news.

Andreas Whittam Smith was a very great man - and in my encounters with him while I worked for many years at The Independent an exceptionally nice one too.

www.independent.co.uk/news/uk/home...

In short, the answer to whether the government can fairly be said to have misled or not on the state of the public finances depends alot on which element of its communications we're talking about 👇

The answer to this one seems to be a clear no, since we know from the OBR’s letter to the Treasury Select Committee on 28 November that its final OBR pre-measures headroom forecast of £4.2bn was delivered to HMT on 31 Oct and did not change after that.

obr.uk/docs/dlm_upl...

ENDS

Rachel Reeves backs away from income tax rate rise after improved economic forecasts The chancellor had been widely expected to increase income tax rates, which would have broken a manifesto promise.

Let’s take the final question as whether the OBR’s forecasts changed in November 2025 in a way which meant income tax rises were suddenly not necessary?

This was the impression by some briefing from within government around 14 November...11/12

www.bbc.co.uk/news/article...

Let’s take the third question as whether the pre-measures fiscal deterioration required tax rises to offset it?

If the goal was to restore 2029-30 headroom to £10bn some sort of fiscal consolidation was needed, although this could have taken the form of spending cuts rather than tax rises...10/12

Though it was actually only slightly smaller than Resolution Foundation's forecast on 4 November 2025 of
-£8bn.

The IFS projection left the government with a pre-measures £6bn deficit vs its borrowing rule but Resolution with £2bn surplus...9/12

www.resolutionfoundation.org/app/uploads/...

IFS Green Budget 2025 | Institute for Fiscal Studies The IFS Green Budget assessed the state of the UK economy and the government’s fiscal position ahead of the Autumn Budget.

This obviously depends on defining what we were "led" to believe.

The deterioration was certainly smaller than IFS/Barclays pre-budget forecast from 16 October 2025 of around
-£16bn...8/12 ifs.org.uk/events/ifs-g...

Let’s take the second question as whether the roughly £6bn deterioration in the pre-measures forecast was significantly SMALLER than we were led to believe by the Chancellor...7/12

Yet there WAS a clear fiscal deterioration in the OBR’s forecast relative to the March 2025 Spring Statement.

The headroom fell from £9.9bn in March to £4.2bn (-£5.7bn) because of changes in the economic outlook.

So RELATIVE TO MARCH a hole could be said to have opened up...6/12

So in that sense there wasn’t a “hole”.

The Chancellor could, technically, have done nothing on taxes and still been forecast by the OBR to be hitting her borrowing rule, albeit by a tiny margin...5/12

The answer is that, according to the OBR, there was still £4bn of headroom against the government’s 2029-30 borrowing target/fiscal rule in its pre-measures forecast...4/12 obr.uk/efo/economic...

Note that we’re talking about the “pre-measures” forecast i.e changes in borrowing resulting from shifts in the overall economic outlook and BEFORE accounting for policy decisions taken in the Budget to increase welfare spending etc...3/12

First, let’s take the question as whether or not there was a “hole” (sometimes described as a “black hole”) in the public finances as a result of the Office for Budget Responsibility’s (OBR) forecast changes...2/12

Did Rachel Reeves and the Government “mislead” people about the state of the public finances and the need for tax rises before the Budget?

I think this is a rather complex question & the answer is not black and white.

A thread…🧵1/12

Thanks to @grattaninstitute.bsky.social for choosing Exile Economics as a recommendation for the Australian PM's summer reading list!

2/ @benchu.bsky.social Exile Economics paints a picture of a world retreating from the global economic system. But cutting ourselves off from these trade and migration flows isn’t just economically damaging – in many cases it’s simply not possible.

A graphic containing book covers of • Exile Economics: What happens if globalisation fails, by Ben Chu • Clearing the Air: A hopeful guide to solving climate change, by Hannah Ritchie • Patriarchy Inc.: What we get wrong about gender equality and why men still win at work, by Cordelia Fine • Is a River Alive? by Robert Macfarlane • Losing It: Can we stop violence against women and children? by Jess Hill • I Want Everything, by Dominic Amerena

1/ Announcing Grattan’s Prime Minister’s Summer Reading List for 2025! 🎉

Here are the six books we think the PM and all Australians should read over summer. #auspol buff.ly/UbafIPQ

OBR: "We have not changed our assessment that Brexit will reduce the level of UK productivity by around 4 per cent after 15 years."

obr.uk/docs/dlm_upl...

...yields now down a bit more - so far so good for HMT...

The latest tax increases are very backloaded in the forecast - according to the OBR projected borrowing is up in every year to 2028-29 relative to the March 2025 Spring statement - only falls in 2029-30

Little movement (so far) in UK government market borrowing costs in response to the Budget - couple of basis points +/- across the yield curve.

Looks like markets expected new headroom vs fiscal rules of around £22bn... www.bloomberg.com/markets/rate...

Key takeaways on Chancellor's policy choices from the accidentally published OBR doc.

- Now £22bn of headroom in 2029-30 (up from £9.9bn)

- £26bn in tax rises in 2029-30 (including extension income tax threshold freeze, NICS on salary sacrifice pensions)

obr.uk/docs/dlm_upl...

How Will the Budget Affect Young People? Ahead of the Budget this week, BBC Verify’s Ben Chu has been to Leeds, where the Chancellor’s constituency is, and has been looking at the figures.

My Budget preview available on BBC iPlayer here.

- Has the Chancellor already hit "working people" with tax rises?
- Is Brexit really to blame for the expected increase in borrowing the forecasts?
- Is it in the interests of young people to put up taxes?

📺👇

www.bbc.co.uk/iplayer/epis...

Could the Budget help turn Generation Z into generation debt? There's growing concern that current tax and spending policies help pensioners, but are unfair on younger generations.

The national debt, benefits, housing, taxation...

How should we think about this week's Budget choices in the context of fairness between the UK's generations?

My analysis for BBC online ✍️👇

www.bbc.co.uk/news/article...

....ICYMI you can catch-up with all three episodes here 👇

bsky.app/profile/benc...

Many thanks to @vickyspratt.bsky.social for this lovely recommendation of my series "The Tax Conundrum" on BBC Sounds...

inews.co.uk/opinion/22k-...

ONS UK population data... www.ons.gov.uk/peoplepopula...

Immigration system statistics data tables Listing of the data tables included in 'Immigration system statistics'.

Data from Home Office on asylum claims...
www.gov.uk/government/s...