a day ago
Chancellor is forced to correct string of gaffes
Rachel Reeves has been forced to correct the official record after she got her facts about a flagship pension reform wrong, underestimated the unemployment rate and confused the name of a Northern town earmarked for a major tram network extension.
The Chancellor, who has previously had to amend her profile on social networking site LinkedIn after overstating her qualifications as an economist, made the string of errors at a recent grilling by peers over her handling of the public finances.
It prompted shadow business secretary Andrew Griffith to accuse her of a 'shocking grasp of detail'. And it came as Reeves prepares to unleash another volley of tax rises later this year that experts say will further strangle anaemic growth.
In one exchange with former Chancellor Lord Lamont, Reeves twice claimed the £425 billion Local Government Pension Scheme was managed by '96 administering authorities' which she wants to cut to 'eight pools'.
'We are going to consolidate local government pensions, because we want them to work better for savers and taxpayers,' she added, flanked by two senior Treasury officials. But the LGPS is managed by 86 local authorities, not 96, while the number of pools is being cut from eight to six under controversial new laws that will force two of them covering the Tory shires of southern England to find new homes by March.
After being contacted by The Mail on Sunday, Treasury officials corrected Hansard, Parliament's written record of debates.
They were also forced to clarify to the House of Lords Economic Affairs committee that when Reeves told peers the unemployment rate was 'just over 4 per cent', the latest figure from the Office for National Statistics was closer to 5 per cent – at 4.7 per cent. Griffith told The Mail on Sunday: 'When she's writing such big cheques with taxpayers' money, it's no time to be loose with your numbers.'
The Chancellor's geography also escaped her at the hearing, which took place three weeks after her tearful appearance before MPs during Prime Minister's questions.
Reeves, who represents a constituency in Leeds, told peers that the Greater Manchester tram network was being extended to 'Bury and somewhere else'. In fact Bury already has a tram stop. The planned extension will go to Stockport, more than 20 miles away.
Bury station is being upgraded but the work was 'not an extension to the metro line', Treasury officials admitted.
The latest revelations about Reeves's lack of attention to detail come as she prepares to fill a hole of up to £50 billion in the public finances in her Autumn Budget. She has ruled out tax rises on 'working people' – namely income tax, VAT and employee National Insurance – but left the door open to raids on inheritance tax, pensions, gambling companies and banks.
Reeves could also extend the freeze on income tax thresholds to help balance the books.
The pause is due to end in 2028, from which point the thresholds are set to rise with inflation. But keeping the freeze for another two years would generate more cash for the Treasury, as rising wages and pensions pull more people into higher tax bands.
Extending the stealth tax, known as 'fiscal drag', could raise £8 billion, claims the Resolution Foundation think-tank.
Experts say she boxed herself in by also pledging to stick to her fiscal rules, which include only borrowing to invest by the end of this Parliament.
Key to how much money she needs to find is how the official forecaster judges likely productivity growth – the rate of hourly output per worker. Reeves will have to find even more money if the Office for Budget Responsibility cuts its forecast for productivity growth, which it has consistently overestimated.
Productivity growth stalled in the second quarter, heaping pressure on the OBR to act.
A downgrade would have 'very significant fiscal implications that far exceed the policy U-turns on welfare spending,' said Simon French at stockbroker Panmure Liberum.
