Rachel Reeves accused of hatching huge 'con' of voters with secret plot to borrow billions

Rachel Reeves has been accused of preparing to “con” the taxpayer by preparing for a £17billion borrowing bonanza by changing her Treasury accounting rules.

Speaking ahead of a visit to New York and Toronto, Ms Reeves reiterated her warning that there are “more difficult decisions” to come, after she announced plans to clobber the elderly with a massive cut to Winter Fuel Payments.

Asked whether she would be willing to change the Treasury’s so-called ‘Fiscal Rules’, which set out how much the Government can borrow and spend, Ms Reeves refused to rule out such a move.

She suggested the major accounting change could be on the cards, replying: “We’ll publish the precise details of the fiscal rules in the Budget”.

There is now widespread speculation that Ms Reeves is planning on using the Budget to announce a major change to the way the Government counts the amount of debt owed by the UK.

The move would see the Treasury change its debt-to-GDP measure to exclude losses made by the Bank of England’s bond-buying programme.

According to financial analysis, the decision would then allow Ms Reeves to borrow £17 billion more without breaking her self-imposed rules.

However the move risks undermining her pledge to carry out “iron discipline” while in No. 11 Downing Street, and stands in stark contrast to her condemnation of Liz Truss’ unfunded borrowing.

Last year she promised the Guardian: “Change will be achieved only on the basis of iron discipline”.

“Working people rightly expect nothing less. Because when you play fast and loose with public finances, you put at risk family finances.”

The Conservative shadow Treasury minister Nigel Huddleston told the Express that such a move would amount to a “con” of the British public, comparing her to a “street swindler playing the three-card monte” and warning voters: “Don’t fall for Labour’s three card trick”.

The Government is also under fire as such a decision would amount to an enormous u-turn.

Conservative MP Nick Timothy, a former Chief of Staff in Downing Street, pointed out that the Chancellor previously promised she wouldn’t “fiddle the figures” around debt targets.

Speaking to Bloomberg in 2023, Ms Reeves emphatically responded to a question about changing the government’s debt target with: “I’m not going to try to fiddle the figures or make something different to get better results”.

“We will use the same models the government uses.”

Mr Timothy observed: “It’s becoming a pattern with her”.

Former Chief Secretary to the Treasury Sir Simon Clarke described the rumoured move as “worrying”, warning that volatile markets at the moment mean the Government should be “very careful of trying to take shortcuts to success”.

He told the Express: “During the general election, the Chancellor rightly emphasised the importance of economic growth to the country’s prospects - in particular given the fiscal challenges of an ageing population.

“It has been worrying to see that exciting focus shift first to tax rises that were never mentioned during the campaign, and now to moving the goalposts on the fiscal rules.

“We know how volatile the global money markets are, and we should be very careful of trying to take shortcuts to success.

“If we are to meet our current and future spending requirements, the UK needs to be a low-tax, high enterprise economy - not one where we penalise success or seek to game the rules.”

Ms Reeves was also handed billions more to play with this week as UK borrowing costs fell to a six-month low.

Economists now say that lower gilt yields and market expectations that further interest rate cuts by the Bank of England will come gives The Chancellor even more room for manoeuvre in the budget.

The current bill on Britain’s £2.7trillion debt mountain currently stands at £90billion a year, more than the budget of the Ministry of Defence, four times the Transport budget and four times the Home Office budget.

Andrew Goodwin at Oxford Economics has said that the large moves in market pricing at the end of last week could now hand the Chancellor an extra £2billion to spend in the Budget.

By contrast, the Chancellor’s hated plan to abolish Winter Fuel Payments for millions of struggling pensioners is set to save her just £1.5billion.

Amid claims that Ms Reeves’ claim of a £22billion fiscal ‘black hole’ left by the previous Conservative government, this week she also declined to rule out increasing capital gains tax as a way of bringing in more revenue while sticking to Labour’s election promise not to raise taxes on “working people”.

There is speculation that the Government is considering increasing CGT in line with income tax, a move that has already sparked warnings it will hit investment in the UK.

Capital gains are currently taxed at 28%, well below the higher income tax band of 45%.

Yesterday the Taxpayers’ Alliance campaign warned Ms Reeves that while she can “fiddle the figures”, she “cannot hide from the mounting debt crisis”.

The group’s head of campaigns, Elliot Keck, told the Express: “With the national debt surging by hundreds of millions of pounds a day already, taxpayers will rightly be concerned that this will be yet another government that delivers strong rhetoric on the public finances, while simply adding to the nation's credit card bill”.

"Rachel Reeves should focus on making the difficult decisions, not meddling with methodologies in a doomed attempt to make ends meet.”

Ms Reeves is in America to drum up investment in the UK, and told reporters that she will get debt down “as a share of GDP”.

She added: “Crucially we will balance tax receipts with day-to-day spending. But we’ll set out the precise details of that at the time of the budget”.

She is set to meet the chiefs of a number of US banks and businesses in New York, before meeting former Bank of England Governor Mark Carney in Canada tomorrow.