Downing Street has brushed off claims that Rachel Reeves misled voters ahead of the budget about the state of the public finances.At the No 10 lobby briefing, the PM’s spokesperson was asked why, in her speech on 4 November, and again in a Radio 5 Live interview a few days later, she said that the downgrade in the productivity growth forecast meant meeting her fiscal rules would be very difficult.Reeves told R5L on 10 November: “It would, of course, be possible to stick with the manifesto commitments [not to raise the main taxes].But that would require things like deep cuts in capital spending.”Asked today if these warnings meant Reeves misled the public in the run-up to the budget about the state of the public finances, the PM’s spokesperson said: “I don’t accept that,”Asked why Reeves was claiming that there was a black hole in the public finances, when the OBR today is saying there wasn’t (see 12.

31pm), the spokesperson said the chancellor set out the country’s financial situation in her budget speech.He said the government has made “fair and necessary” choices to deliver investment in public services, and to take 500,000 children out of poverty.Asked if Reeves was telling the truth when she told R5L the government would only be meet its fiscal rules with deep cuts to capital spending, the spokesperson replied:The chancellor set out the challenges facing the country … She set out the context the country is facing and she set out at the budget that we are delivering on the manifesto to keep taxes low for working people.Asked why Reeves needed to give a speech about the difficult choices when she had been told she was not on course to miss her targets, the spokesperson said Reeves used the speech to set out the challenges that the country was facing.Asked if the speech was “disingenous”, the spokesperson said the chancellor was setting out the challenges she faced.

Asked why Reeves was talking about a productivity challenge that, according to the OBR, no longer existed, the spokesperson said Reeves had explained why she wanted to increase the amount of “headroom” in the budget (the surplus built into future spending plans),Ipsos has also released polling about the budget,It says 56% of people say they are “more concerned” about the state of the economy since the budget was unveiled, and it suggests that Rachel Reeves is less highly rated than any of the last three Tory chancellors,The poll also suggests the Reform UK is now seen as the party most trusted to manage the economy,In one respect, this is perverse.

Reform UK do not even have a designated candidate to be chancellor, they currently have very few economic policies and recently their leader, Nigel Farage, had to abandon almost the entire tax-and-spend programme set out in the party’s 2024 manifesto.The manifesto plans were widely dismissed as implausible, with one analysis saying they would be even worse than Liz Truss’s mini budget.But the findings are consistent with Reform UK having a clear lead in voting intention polls, and they probably just reject the fact that there is widespread scepticism about what is on offer from the mainstream parties.Here is Heather Stewart’s story on the OBR letter released today.(See 12.

31pm.) She says it casts doubt on claims Rachel Reeves dropped plans to raise income tax in this week’s budget because of rosier forecasts, pointing out she knew about these well before the change of heart.The French government plans to authorise interventions to halt small boats at sea before they pick up people attempting to reach the UK after pressure from Keir Starmer.As Rajeev Syal reports, it is understood that French security forces will target empty “taxi boats”, or large dinghies, before they pick up passengers from beaches to be taken to the UK.According to the Paris-based newspaper Le Monde, Starmer wrote to President Emmanuel Macron urging him to back the plan and saying we currently “have no effective deterrent” in the Channel.

Rajeev’s full story is here.Employers could face higher costs under one aspect of the employment rights bill U-turn, lawyers have warned.Ministers have been criticised the decision to abandon the commitment to day one protection from unfair dismissal in the bill.But, as part of the announcement last night, the government also said that the “compensation cap will be lifted” for people who win a case for unfair dismissal.It also said that the six-month period when protection from unfair dismissal kicks in will be included in primary legislation, meaning that it would be harder for a future government to change it.

Commenting on the lifting of the compensation cap, Ben Smith, a senior associate at Littler, an employment law firm, said:Currently that cap is the lower of 52 weeks’ pay or £118,223,It’s unclear whether this means the cap will be increased or removed entirely, though speculation is that only the 52 weeks’ pay element of the cap will be removed,In the initial “New Deal for Working People” plan before the election, Labour said they wanted to entirely remove caps on compensation,Removing the cap entirely would be a major change and could mean that dismissals carry more risk for employers, particularly where the employee was a high earner,And Emily Chalkley, a partner specialising in employment at the law firm Charles Russell Speechlys, said:The headlines today have focused on the U-turn on day one unfair dismissal rights, but there has been far less commentary on the proposal that the compensation cap will be lifted, which is perhaps just as significant.

This could mean the entire cap is being removed and all unfair dismissal awards will be unlimited (like discrimination and whistleblowing awards).Any lift of the statutory unfair dismissal cap is going to make it more costly for employers who dismiss employees without a fair reason or slip up on their dismissal process.The Department for Business and Trade has been asked to clarify if removing the cap means having no cap at all for compensation payments, or if just one element of the cap will be lifted.I will post an update when I get a reply.The TSSA transport union has joined Unite (see 8.

51am) in criticising the U-turn on the employment rights bill.Maryam Eslamdoust, its general secretary, said:This is a very significant watering down of the employment rights bill and a breach of Labour’s manifesto commitment – one we do not support.Our union has long campaigned for strong, meaningful rights from the first day of employment, arguing that day one protection is essential to safeguard workers from arbitrary and unjust treatment.This remains our position and it’s vital that the government thinks again about this damaging U-turn.But Mike Clancy, general secretary of the Prospect union, has explained why his union is one of those backing the compromise.

In a statement he said:Faced with the prospect of waiting until 2027 or 2028 for these rights, the case for returning to the negotiating table was overwhelming, so unions initiated discussions and engaged with a clear set of objectives, which we ultimately secured.The deal we have agreed to is both a good deal for our members and a necessary one.We have significantly strengthened unfair dismissal rights for millions of workers, created a compelling deterrent against bad employer behaviour, and given ourselves the best possible chance of getting this legislation into law.Back to the employment rights bill, and Mainstream, the new centre-left Labour group associated with Andy Burnham, has said that, even with the U-turn over day one protection from unfair dismissal, the employment rights bill will be good for workers.But it says unions have been let down, and it suggests another bill may be needed.

In a statement, Mainstream’s interim council said:Ensuring millions of workers have enhanced sick pay protection, defending improvements in collective rights, and progress on guaranteed hours are good outcomes from this compromise if it sticks.But we have to be clear: the delay in introducing this legislation, an unwillingness to use the Parliament Act, and the bad faith interference of those who would see Labour ditch the whole project have left unions high and dry in the wrangling of the last few weeks.It’s time for a change of direction and the development of a second Employment Rights Act which fulfils manifesto commitments on single worker status and sectoral collective bargaining - policies that are popular with the mainstream of the Labour Party and the country.Last night YouGov released some polling on the budget.It suggests people see the budget this week as the most unfair budget since 2010 – apart from Liz Truss’s mini budget.

In his write-up for YouGov, Matthew Smith says:Britons are more than twice as likely to describe the budget as unfair (48%) than fair (21%) and are similarly likely to see it as unaffordable (47%) than affordable (22%).This fair-unfair ratio is a distinct worsening for the government from last year’s budget, on which Britons were split 34%-34%.In fact, it is the second worst score of any budget YouGov has measured going back to 2010, coming behind only the infamous Truss-Kwarteng mini budget in 2022.(While it ties with George Osborne’s 2012’s ‘Omnishambles’ budget in terms of the number saying ‘unfair’, fewer people describe Reeves’s offering as ‘fair’ (21%) than Osborne’s (32%).)YouGov also found that a majority of people, including a plurality of Labour voters, think Rachel Reeves is doing a bad job as chancellor.

Most Britons say Rachel Reeves is doing a bad job as chancellor (59%), an increase of four points since our polling following the spring statement in March of this year.Just 11% think she is doing a good job (down from 14%).Among those who voted for Labour at the 2024 election, almost twice as many say Reeves is doing a bad job (40%) as a good one (22%).This compares to a 33-28% split in March.YouGov also asked people about a range of measures in the budget.

The tax on gambling was the most popular, and the cut to the amount of money people can put into a cash Isa was the least popular,Kemi Badenoch has claimed that the OBR revelations today (see 12,31pm) show that Rachel Reeves “lied to the public” to justify tax rises in the budget,In a post on social media she said:Yet more evidence, as if we needed it, that the Chancellor must be sacked,For months Reeves has lied to the public to justify record tax hikes to pay for more welfare.

Her Budget wasn’t about stability.It was about politics: bribing Labour MPs to save her own skin.Shameful.At the Downing Street lobby briefing this morning No 10 rejected the claim that Reeves misled people about the state of the public finances.(See 1.

09am.)Economists and economic commentators are baffled by the OBR revelations this morning.This is from Helen Miller, director of the Institute for Fiscal Studies.Interesting new info from @OBR_UKOn Oct 31 Rachel Reeves knew that - before any policy action - she still had a forecast SURPLUS.She was not handed a big fiscal repair job & forecast hadn’t moved much pre-measures.

Why then that odd breakfast tv speech?This is from a post by Ed Conway, Sky News’s economics editor.When @RachelReevesMP gave “that” press conference in Downing St earlier this month she put the @OBR_UK and its forecasts front and centre as the explanation for why “difficult decisions” (eg tax rises) were necessary.Yet today we learn, from the chronology sent by the head of the OBR to Meg Hillier of the Treasury Committee, that not only was the OBR forecast NOT going to wipe out her headroom against her fiscal rule, but it had been telling HMT that for weeks …On the one hand the chronology shows that maybe the decision to hold the Budget so late was a masterstroke since it did indeed provide time for the OBR forecast to improveOn the other hand, the tone and content of her press conference seems all the more strange knowing what we know now.This is from Ben Zaranko, an IFS economist.At no point in the process did the OBR have the government missing its fiscal rules by a large margin.

Leaves me baffled by the months of speculation and briefing,Was the plan to lead everyone to expect a big income tax rise, then surprise them on the day by not doing it,,?And this is from Robert Peston, ITV’s political editor,The OBR has - of course - in effect confirmed that Rachel Reeves’s decision not to increase the basic rate of income tax had zilch to do with any late-arriving new information about higher tax revenues - which was what was briefed to the media at the time of the u-turn as the justification.

It was all politics.And as I understand it, she was forced to drop the manifesto-breaching rise in the basic rate by 10 Downing StreetDowning Street has brushed off claims that Rachel Reeves misled voters ahead of the budget about the state of the public finances.At the No 10 lobby briefing, the PM’s spokesperson was asked why, in her speech on 4 November, and again in a Radio 5 Live interview a few days later, she said that the downgrade in the productivity growth forecast meant meeting her fiscal rules would be very difficult.Reeves told R5L on 10 November: “It would, of course, be possible to stick with the manifesto commitments [not to raise the main taxes].But that would require things like deep cuts in capital spending.

”Asked today if these warnings meant Reeves misled the public in the run-up to the budget about the state of the public finances, the PM’s spokesperson said: “I don’t accept that,”Asked why Reeves was claiming that there was a black hole in the public finances, when the OBR today is saying there wasn’t (see 12.31pm), the spokesperson said the chancellor set out the country’s financial situation in her budget speech.He said the government has made “fair and necessary” choices to deliver investment in public services, and to take 500,000 children out of poverty.Asked if Reeves was telling the truth when she told R5L the government would only be meet its fiscal rules with deep cuts to capital spending, the spokesperson replied:The chancellor set out the challenges facing the country … She set out the context the country is facing and she set out at the budget that we are delivering on the manifesto to keep taxes low for working people.Asked why Reeves needed to give a speech about the difficult choices when she had been told she was not on course to miss her targets, the spokesperson said Reeves used the speech to set out the challenges that the country was facing.

Asked if the speech was “disingenous”, the spokesperson said the chancellor was setting out the challenges she faced.Asked why Reeves was talking about a productivity challenge that, according to the OBR, no longer existed, the spokesperson said Reeves had explained why she wanted to increase the amount of “headroom” in the budget (the surplus built into future spending plans).Talks on the UK joining the European Union’s flagship £130bn defence fund have failed, PA Media reports.PA says:Negotiations foundered over how much the UK should pay to participate in the EU’s Security Action for Europe (Safe) rearmament fund.Reports suggested the UK rejected French demands to pay up to £5bn to participate in the scheme.

Minister for European Union relations Nick Thomas-Symonds said it was “disappointing” but the UK was focused on obtaining “value for money”.The Safe scheme will provide up to €150bn in “competitively priced, long-maturity loans” to EU member states requesting financial assistance for investments in defence capabilities, with the UK hoping to be one of the partner countries that could participate in joint procurement exercises, potentially benefiting British firms.But a Times report earlier this month suggested France had demanded £5bn to join while the UK was prepared to offer less than £1bn.In his statement, Thomas-Symonds said:From leading the Coalition of the Willing for Ukraine to strengthening our relationships with allies, the UK is stepping up on European security in the face of rising threats and remains committed to collaborating with our allies and partners.In the last year alone, we have struck defence agreements across Europe and we will continue this close cooperation.

While it is disappointing that we have not been able to conclude discussions on UK participation in the first round of Safe, the UK defence industry will still be able to participate in projects through Safe on third country terms.Negotiations were carried out in good faith, but our position was always clear: we will only sign agreements that are in the national interest and provide value for money.We continue to make strong progress on the historic UK-EU May agreement that supports jobs, bills, and borders.In the last fortnight, we have launched negotiations on a food and drink deal and energy deal that will bring down bills and slash red tape for business.