By David Milliken and Andy Bruce
London — UK finance minister Rachel Reeves on Wednesday condemned leaks about key details of her November 26 budget that appeared in media before her annual tax and spending statement to parliament.
Britain’s government bond market was rocked by a Financial Times story on November 13 that said Reeves had U-turned on a planned increase in income tax rates.
Reeves told parliament’s Treasury Committee the leak was not the result of an authorised private briefing and presented what she regarded as a partial and inaccurate view of her budget strategy. Political opponents have accused Reeves of misleading the public in the run-up to the budget by overstating the economy’s weakness to justify tax increases that were only needed to fund higher welfare spending demanded by her Labour Party’s MPs.
Reeves had previously denied being misleading about the impact of a productivity downgrade and higher inflation forecasts from the Office for Budget Responsibility (OBR). She said that though higher inflation boosted tax revenue in cash terms, it eroded government spending power.
The gilt market has calmed in December and traded in line with international markets since the budget, with long-dated yields — most sensitive to worries over fiscal sustainability — little changed over the last two weeks.
‘Very damaging’
In a sometimes heated question-and-answer session with MPs, Reeves said she was fully in control of media briefings from the finance ministry, adding that unauthorised leaks were “very serious”.
“I would reiterate in the strongest terms that leaks are unacceptable. The budget had too much speculation. There were too many leaks, and much of those leaks and speculation were inaccurate and very damaging,” she said.
The government is conducting an inquiry into whether civil servants, ministers or political advisers passed information to the media. Reeves also said it was unlikely that the OBR, the independent fiscal watchdog, would have a new chair to replace Richard Hughes in time for her next fiscal update in 2026.
Hughes resigned after an investigation showed systemic issues were to blame for the OBR’s inadvertent publication of budget documents shortly before Reeves was due to present her tax and spending plans.
Reeves ruled out charging capital gains tax on primary residences and scrapping the so-called triple lock on state pensions during the remainder of the parliament, which is due to run until 2029.
The triple lock pegs increases in the state pension to whichever is the highest of consumer price inflation, average wage growth or 2.5%.
Prime Minister Keir Starmer pledged not to charge capital gains on primary residences or scrap the triple lock ahead of Labour’s 2024 election victory.
Reeves said she had no plans to further increase the duty on electric vehicles (EVs), at least until the adoption of EVs had been fully secured.
The new mileage-based charge for electric and plug-in hybrid vehicles introduced in the budget takes effect in April 2028, which the finance ministry hopes will offset expected declines in conventional fuel duties for cars with combustion engines.
Reuters
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