This article was published in The Telegraph on 29 October 2025.
Jeremy Hunt has said it is “ridiculous” to blame the Office for Budget Responsibility (OBR) and Tory tax cuts for Labour’s economic woes.
The former Tory chancellor said Rachel Reeves must take responsibility for the difficult state of her upcoming Budget after hitting the economy with record-breaking tax increases last year.
His comments follow reports of “fury” in Downing Street as the OBR prepares to deliver a bigger-than-expected downgrade to productivity forecasts, forcing the Chancellor to find billions more in either tax rises or spending cuts.
Ms Reeves and Sir Keir Starmer are said to be angry at the timing of the downgrade, which they believe reflects the impact of past Conservative policies and should have come under Mr Hunt.
However, the former Tory chancellor said: “It is ridiculous to blame the OBR [and] tax cuts that grew the economy when Labour’s tax rises actually shrunk it. Rather than trying to find someone to blame, they need to start getting a few decisions right.”
Mr Hunt cut National Insurance contributions twice before last year’s general election, at a cost of £20bn. Ms Reeves has since raised employers’ National Insurance in a £25bn raid on business.
Economists forecast that Ms Reeves faces a shortfall of as much as £35bn in next month’s Budget.
The OBR is understood to now believe productivity growth will be 0.3 percentage points worse than previously expected, blowing a hole of up to £27bn in the Chancellor’s plans.
Ms Reeves on Monday said the downgrade was “based not on anything this Government has done, but on our past productivity numbers, which, to be honest, since the financial crisis and Brexit have been very poor”.
However, Helen Miller, director of the Institute for Fiscal Studies, said the Chancellor was in a mess of her own making after leaving herself an extremely small fiscal cushion against bad news.
The Chancellor left herself a buffer of only £9.9bn to hit her fiscal rules – a very small margin when compared to the overall scale of government spending, which is on track to rise to £1.5tn per year.
“Having the very, very small headroom Rachel Reeves has given herself does lead to this instability, because completely run-of-the-mill forecast changes can knock you off course – not because anything has really changed in the world, just because forecasting happens that way,” Ms Miller told the House of Lords’ Economic Affairs Committee.
“Previous chancellors under the rules had much higher levels of headroom. Jeremy Hunt was the first chancellor to cut that headroom back to a very small margin, and Rachel Reeves chose to stick with that.”
Ms Miller added that “speculation and uncertainty” around upcoming tax increases were “directly damaging, because firms don’t invest when they are not sure what is going to happen”.
She said: “The problems we have got at the moment about the speculation are to a very large degree directly the result of the choice the Chancellor made to have a very small headroom against the rules that she set herself.”
It came as the Confederation of British Industry said business activity was in free fall, in part blaming the lack of clarity about the Budget.
“Uncertainty around the upcoming Budget is weighing heavily on sentiment, with many firms keeping key decisions on hold until more clarity is forthcoming,” said Alpesh Paleja, deputy chief economist at the business group.
“Cost pressures from a variety of sources remain strong, with last year’s tax rises adding to the drag. As a result, tough decisions to deliver policy stability and address fiscal pressures will be needed at the Budget.”
He added that the private sector “cannot bear the brunt” of tax rises for the second Budget in a row, noting “the business tax burden is already at a 25-year high”.
Lord Lamont, who served as chancellor in the early 1990s under John Major, described the “endless speculation on headroom”, and accompanying speculation on tax rises, as “terribly, terribly destabilising”.
“The whole concept of a buffer is a sort of reserve. The swings that you get in public finance are absolutely ginormous, the average in one year is something like £20bn in either direction, i.e. £40bn,” he said.
“We seem to have ended up with a situation which is very unstable.”
A Treasury spokesman said: “We won’t comment on speculation ahead of the OBR’s forecast, which will be published on Nov 26.”