Claims Reeves’s post-Budget U-turns cost her £3bn of £22bn headroom in just six weeks

Fears have been raised that Rachel Reeves may have already spent up to £3bn of the £22bn headroom she gave herself in the Budget in just six weeks.

Tory shadow chancellor Sir Mel Stride is pressing the chancellor to “come clean” over whether her spring statement in March will change into a mini-Budget after a flurry of U-turns and concessions since she delivered her Budget on 26 November.

It comes amid conflicting claims over how much a U-turn on scrapping the Covid business rate relief will cost the Exchequer as MPs are set again to debate the Budget in the committee stage in the Commons this week.

Treasury sources have suggested that it could be £300m with the help focused on pubs, but other sources have suggested the bill could be as much as £2.4bn.

The discrepancy lies in the confusion over whether the U-turn will cover pubs alone or other parts of the high street as well.

On Sunday, Labour rebel Rachael Maskell added her voice to those demanding that high street shops and cafes were also covered.

She told Times Radio: “I think the reason we’re hearing so much about pubs is pubs have a very strong lobby and have been able to get that message through to the government.

“But it is hitting other parts of the sector, the hotel part of the sector, leisure, tourism, as well as what I’ve just been talking about, the retail sector as well. And little independent shops perhaps don’t have the routes into Westminster.”

Hinting at a battle between Ms Reeves and Labour backbenchers to come, she added: “The campaign doesn’t stop because the reality is we’ll be fighting for those jobs. We’ll be fighting for people to be able to maintain their businesses. And ultimately, it will mean closures and unemployment rising.

“I don’t think any of us want to see that when business owners have worked so hard over the real challenges they’ve had with Covid and then, of course, the cost of living.”

Meanwhile, rejoining the EU’s Erasmus scheme is estimated to have cost more than £500m, while changes to inheritance tax to exempt more family farms are expected to cost £200m.

The chancellor gave herself extra headroom of £22bn in the last Budget, but taking all these calculations into account, the figures suggest she could have spent up to £3bn of that in just six weeks since.

On top of that, there are still no costs on the decision by Ms Reeves to exempt pensioners from the freeze in income tax thresholds.

Sir Mel has written to Ms Reeves demanding she commit to giving an oral statement to the Commons with her spring statement, which was meant to be an update on predictions from the Office for Budget Responsibility (OBR) and a “non-fiscal event”.

Ms Reeves, whose own future as chancellor is under scrutiny, has said she will give an oral statement to enable MPs to question her on the details.

Sir Mel said: “Since the Budget we’ve already had U-turns and other major spending including: a partial U-turn on the family farm tax and family business tax; a U-turn about to be announced on business rates; exempting some pensioners from the freeze in tax thresholds; and over half a billion pounds handed to the EU to rejoin the Erasmus scheme.

“None of those things were costed at the Budget 6 weeks ago. We still have no answers yet about how any of that will be paid for.

“The non-fiscal event in March is already looking like it will be a fiscal event after all. Rachel Reeves has completely lost control of the nation’s finances.”

The figures, though, are disputed by the Treasury.

A Treasury spokesperson said: “We do not recognise these figures. We’re backing hospitality businesses with a £4.3bn support package to limit bill rises, alongside capping corporation tax at 25 per cent, cutting red tape and taking action on the cost of living to boost high streets.

“The Budget doubled the fiscal headroom while confirming that we will scrap unnecessary bureaucracy for pensioners whose only income is the state pension, ending small tax bills through simple assessment from 2027-28.

“We’ve also listened to farmers by raising the relief threshold to £2.5m, protecting small family farms and businesses while ensuring the very largest estates pay their fair share.”