Rachel Reeves is braced for the Budget lies storm to escalate again today after the head of the Treasury watchdog was ousted.

Speculation is swirling about Richard Hughes’ intentions after he dramatically quit as the head of the OBR following months of tensions with the Chancellor.

The departure was ostensibly linked to the extraordinary early publication of Budget documents due to a tech glitch.

But the independent body has been at daggers drawn with Ms Reeves and her team over the way forecasts were deployed before the fiscal statement last week.

That culminated last week when Mr Hughes took the unusual step of spelling out the timetable of what economic forecasts were supplied when – exposing that Ms Reeves had talked up dire numbers even after being told the government was on track to run a surplus.

The Treasury responded by saying they had received assurances that such transparency would not be the ‘usual’ practice. 

Ms Reeves is said to have regarded Mr Hughes as a ‘brick wall’ for refusing to include the minor effects of trade deals in forecasts, while Keir Starmer made clear yesterday he had been infuriated by the decision to stage a review of long-term productivity.

Remaining top officials at the OBR are due to give evidence to MPs this morning. Mr Hughes will not be attending, but could still choose to speak out.

The economist – who once observed he was right for the watchdog role because he ‘knew where the bodies were buried’ – could be devastating to Ms Reeves if he reveals anything about their behind-the-scenes wrangling.   

The OBR’s anger was signalled in the report on the Budget leak yesterday.

Non-executive directors Baroness Hogg and Dame Susan Rice launched a barb at ‘deliberate’ leaks, in an apparent nod to the perceived briefing campaign by the Treasury.

‘In the run-up to the delivery of the Budget, any leaks concerning the OBR’s forecasts, whether accurate (as in this case) or inaccurate, whether inadvertent (as in this case) or deliberate, are to be greatly deplored,’ the foreword said. 

‘They must be taken very seriously by institutions from which leaks emerge. As evidence of the seriousness with which the OBR takes this issue, we have noted that throughout the preceding months the OBR had stuck rigidly to the principle of confidentiality.’ 

In a letter to the Chancellor and the House of Commons’ Treasury Committee yesterday, Mr Hughes said he was taking ‘full responsibility’ for the embarrassing error.

Charlie Bean, former deputy governor at the Bank of England, told BBC Radio 4’s Today programme that Ms Reeves should have prevented Mr Hughes from resigning.

He said it would have been ‘difficult’ for the chair not to offer to quit, but the Chancellor pointedly did not ‘step in’ to keep him.

Sir Charlie said Mr Hughes had been a ‘very effective leader of the OBR’ and was ‘energetic, rigorous and fair’. 

Tony Yates, a former BoE adviser who worked with Mr Hughes at the Resolution Foundation, told BBC Radio 5 Live’s Wake Up to Money that there did appear to be ‘tension between Richard Hughes and his team and Rachel Reeves at the moment’.

‘Their reluctance to be swayed by the enthusiasm with which they have announced various supply side reforms, their reluctance to translate that into improvements in the growth forecasts and therefore in tax revenues… I really hope that didn’t come into it,’ he said.

‘I do think it’s kind of a shame the Chancellor didn’t try to insist he stay at least for the investigation and improvement in web processes… she could have given them a slap on the wrists about that and backed him, but she chose not to.’ 

Following Mr Hughes’ resignation, Tory leader Kemi Badenoch claimed Ms Reeves was using the outgoing OBR chief as her ‘human shield’.

‘Someone has resigned as a result of the Budget chaos… but it isn’t Rachel Reeves,’ Mrs Badenoch posted on X.

‘The Chancellor is trying to use the chair of the OBR as her human shield. But I will not let her. Why is it ALWAYS someone else’s fault with Starmer and Reeves?’

Reform UK leader Nigel Farage MP said: ‘Whatever the failings of the OBR, they have not wilfully attempted to mislead the British public.

‘The wrong person has resigned today, it should have been Rachel Reeves.’

The announcement of Mr Hughes’ exit appeared to have been timed until after the close of financial markets on Monday, perhaps due to fears it could spark meltdown.

His exit also means he will no longer be grilled by MPs on the Treasury Committee on Tuesday morning about the Budget process.

Criticism of the Chancellor has spread beyond Opposition parties. 

Veteran Labour MP Graham Stringer said the preparation for the Budget had been ‘chaotic and appalling’ – and he predicted that both the Prime Minister and Chancellor could be ousted next year if they fail to turn things round before vital local elections in May.

He told LBC radio: ‘I think that if the elections are as bad as they are, and if there is no improvement in basically the day to day business of government, as well as the medium term assessment, I can’t see how they can stay.

‘This government entered office with high hopes from virtually every Labour MP, and those hopes have been dashed.’