Chancellor of the Exchequer Rachel Reeves speaks to nurses and members of the media during a visit to the University College London Hospital after she delivered her Budget, November 26, 2025
CHANCELLOR Rachel Reeves defended her handling of the Budget today amid claims she misled the public about the scale of the fiscal black hole.
The Office for Budget Responsibility (OBR) said it told Ms Reeves as early as September 17 that the fiscal shortfall was smaller than first expected.
Ms Reeves previously said there was a £20 billion black hole in the public’s finances, but the OBR later reported a £2.5bn gap.
BBC’s Laura Kuenssberg accused the Chancellor of giving the impression that she had to put up taxes to fill a hole “that we know did not exist.”
Ms Reeves maintained that the fiscal headroom had in fact “deteriorated,” adding that the decision to scrap the two-child benefit cap was funded by increases to online gambling taxes and cracking down on tax evasion.
Defending her actions on Sky News, she said: “In the context of a downgrade in our productivity, which cost £16bn, I needed to increase taxes, and I was honest and frank about that in the speech that I gave at beginning of November.”
Both the Conservatives and the SNP have written to the Financial Conduct Authority calling for an investigation.
SNP Westminster leader Stephen Flynn MP said: “We now know for certain the Labour government’s Budget was based on a pack of lies about a non-existent £20bn black hole.
“The Chancellor’s position is untenable.
“Millions of families are now paying the price for Labour Party lies and failure — with taxes up £26bn, economic growth slashed, living standards falling, the cost of living soaring, and UK unemployment rising to a four year high on their watch.”
A Momentum spokesperson said: “The most concerning thing about the Budget is not questions over black holes which are part of the rigid fiscal framework the Chancellor had imposed on herself.
“The main problem is that despite welcome moves like the scrapping of the two-child cap, living standards are still projected to stagnate under Labour.
“Only a complete overhaul of the economy will deliver change for the people Labour was founded to represent.”
