Chancellor Rachel Reeves has condemned leaks ahead of her autumn Budget as 'unacceptable', telling MPs that the decision not to raise income tax was made 'in close partnership' with Prime Minister Keir Starmer. Appearing before the Commons Treasury committee, Reeves said she was 'absolutely categorical' that there had been no authorised briefing on the U-turn, which was widely reported before her November speech.
Reeves revealed that she and Starmer had considered increasing income tax rates to address a shortfall in public finances, but abandoned the plan because other tax measures raised sufficient revenues. 'We did look at whether we needed to increase the rates of income tax given our concerns around the forecast … In the end that was not necessary,' she said. The chancellor met Starmer two to three times a week in the run-up to the Budget, describing their approach as a 'team' effort.
The Treasury and the Office for Budget Responsibility (OBR) are conducting inquiries into a series of briefings and gaffes, including the inadvertent early release of Budget documents, which led to the resignation of OBR chair Richard Hughes. Reeves said a replacement is unlikely before her spring statement.
Reeves said she reserves the right to introduce fresh tax increases or spending cuts if the public finances deteriorate, but downplayed the likelihood, citing almost £22bn of headroom against her fiscal rule. She ruled out charging capital gains tax on primary residences or scrapping the pensions triple lock in this parliament. The government plans to legislate quickly to enact tax changes, including a new council tax surcharge on properties worth over £2m and a 3p-per-mile levy on electric vehicles.
