The independent spending watchdog has backed up Labour’s claim that the Tories left a multi-billion pound “black hole” in the government finances.
Since being elected, Keir Starmer’s party has repeatedly alleged that the former government left a ″£22bn black hole” in the government coffers which Labour would have to pay for during their time in office – an allegation the Conservatives deny.
During her Budget announcement today, chancellor Rachel Reeves revealed that the Office for Budget Responsibility (OBR) has concluded the Conservatives were not entirely honest about their spending plans.
In its review, the OBR said that then Conservative Treasury had not revealed the £9.5bn of net pressures of departments’ budgets in 2024-5 when preparing for its March Budget.
Treasury sources insisted that was the figure in February and that it had now grown to £22bn.
The watchdog also added that if this information about the spending pressures within Tory departments had been available, “we would have reached a materially different judgement” about spending for the year.
Although it did not say how its forecasts would have changed, it added that the £2.9bn underspend against budgets it had assumed in March would “very likely have been dropped”.
Still, it said: “It is impossible to say what a different government or chancellor would have done.”
The OBR continued: “Without rewriting history on the basis of greater pre-forecast information and challenge, it is not possible to judge how much of the £9.5 billion additional pressures identified from the information provided by the Treasury for this review, as existing at the time of the challenge panel in February, would have been absorbed and offset by other savings.
“However, the OBR would unquestionably have given more pointed warnings.”
The OBR also defended itself after shadow chancellor Jeremy Hunt complained that he had not been consulted over their review or shared it with him ahead of its publication.
“Based on advice from the Cabinet Office Propriety & Ethics Unit, we did not consider it necessary, or appropriate, to share it with the shadow chancellor in advance of publication,” it said.
Amid additional questions over why it had published its review on Budget day, the OBR said: “The review includes potentially market sensitive details about changes to our fiscal forecast which it would not be appropriate or responsible to disclose without the latest forecast itself.”
In the Commons, Reeves also used the OBR’s review to her advantage, saying: “Let me be clear: that means any comparison between today’s forecast and the OBR’s March forecast is false because the party opposite hid the reality of their public spending plans.”
Hunt shouted, “not true” during this part of Reeves’ speech.
Outgoing Tory leader Rishi Sunak hit back at the chancellor’s revelations after her statement, telling the Commons that the chancellor “has sought to politicise the independent OBR that should be above politics”.
He said that playing politics has “done real damage to our economy” and that Downing Street at damaging the country “for political purposes”.
He added that Labour’s claim about their inheritance from the Tories is “nonsense”, noting that inflation is back at its 2% target, there is low unemployment and the UK is the fastest growing advanced economy in the world.
He said his government had to make “tough choices” due to the Ukraine war and the Covid pandemic, which Labour backed at the time.
Sunak claimed that the current government should take responsibility for their choices.