Keir Starmer ALSO knew there was no 'black hole' - but still approved Rachel Reeves's 'lies'

In it, Ms Reeves warned that poor productivity would have "consequences for the public finances" - while families would need to "do their bit" to plug the gap.

But a few days earlier, the Office for Budget Responsibility had told her the black hole had disappeared, and had in fact been replaced by a £4.2billion surplus.

The OBR had also made the PM aware the black hole had vanished.

But last night, No10 claimed Ms Reeves's comments were "entirely accurate" - and branded claims of misleading the public "categorically untrue".

Downing Street added that the Prime Minister was aware of both the OBR figures and "the content of the speech".

Either way, a string of senior Labour critics have called for the Chancellor to be sacked.

"It is time to change course with a new Chancellor and rebuild confidence with the British people," Reform UK deputy leader Richard Tice said.

And Sir Mel Stride, the Shadow Chancellor, has written to the Financial Conduct Authority urging it to investigate "potential market abuse" from Labour's "misleading" pre-Budget statements and briefings.

OBR letters to the Treasury show how Ms Reeves exaggerated the size of the black hole - allegedly to save herself and Sir Keir from the Labour left's demands for tax rises.

After that came to light, bristling Labour figures began firing shots at the PM.

MORE ON RACHEL REEVES:

• 'We're f***ed' - UK pubs plead for mercy after Rachel Reeves launches extraordinary 'stealth tax'
• Kemi Badenoch laughs at claims she is bullying Rachel Reeves as she slams Labour
  
• Rachel Reeves in bitter family feud as Chancellor's uncle blasts Budget - 'Worst I’ve ever heard!'

One party source said Sir Keir was standing by the Chancellor because "Rachel is inextricably tied to Keir Starmer and vice versa", adding that if Ms Reeves were ousted, it would bring down the Prime Minister too.

Another added: “This looks pretty bad. Keir made a point of being more involved in the Budget from the beginning, and now it appears the story from the Chancellor is not what the OBR is saying. There are clearly questions for Keir and Rachel to answer."

An MP added: "It's hard to see how they come back from this".

OBR chief Richard Hughes had written to the Treasury Committee confirming that "at no point" did the Chancellor face a black hole greater than £2.5billion.

By October 31, the watchdog said the black hole had disappeared, and had in fact been replaced by a £4.2billion surplus.

Four days later, she gave her pre-Budget Downing Street address warning how poor productivity would have "consequences for the public finances" - while families would need to "do their bit" to plug the gap.

She added: "I'm being honest with people."

Now, No10 has claimed the £4.2billion surplus was not actually a surplus.

It said the figure did not factore in the cost of the winter fuel U-turn at £1.25billion, the cancelled £5billion in benefits cuts and the £3billion cost of lifting the two-child benefit cap.

Combined, those would have meant the black hole was valued at £5billion.

A senior Government source, according to The Times, branded the situation a "silly row brought about by people who can't do maths".

While a Downing Street source said: "Of course No10 was aware of the OBR figures which showed the need for significant revenue-raising to meet our commitments and to achieve the desired headroom.

"Those figures reflected the OBR's productivity downgrade. The right choices were then made to stabilise public finances through greater headroom, reduce energy bills and tackle child poverty.

"No10 was aware of the content of the speech, which we believe entirely accurately outlined the need to raise revenues.

"The idea that there was any misleading going on about the need to raise significant revenue as a result of the OBR figures, including the productivity downgrade they contained, is categorically untrue."