Chancellor Rachel Reeves has confirmed that she and Prime Minister Sir Keir Starmer decided 'as a team' not to raise income tax in the upcoming Budget, following a leak that revealed the plan had been dropped. Appearing before the Treasury Select Committee, Reeves expressed frustration over the leak, which she described as 'incredibly damaging', and announced a leak inquiry covering ministers, civil servants, and advisers.
Reeves stated that the decision to extend the freeze on tax thresholds instead of hiking income tax was made jointly with Starmer, emphasising their 'very close partnership'. She noted that they met two to three times a week during the Budget process, which is not always the case between chancellors and prime ministers. The Chancellor also criticised the volume of speculation and leaks, which she said were often inaccurate and damaging.
The leak, reported by the Financial Times, revealed that proposals to increase income tax rates for the first time in 50 years had been dropped. Reeves insisted it was not an authorised briefing but a leak. The Treasury permanent secretary, James Bowler, confirmed that the leak inquiry would cover ministers as well as officials and advisers.
Reeves also addressed accusations of misleading the public about the state of public finances, after a letter from the Office for Budget Responsibility (OBR) contested her narrative of a 'black hole'. The OBR's pre-Budget forecasting suggested her spending plans would run a surplus due to changing economic headwinds. The Chancellor defended the process, saying that pre-measures forecasts are not the final word from the OBR.
In the Commons, the Tories tabled a censure motion calling on Reeves to apologise for how the Budget unfolded, but MPs rejected it by a majority of 207. Shadow Treasury minister James Wild said an apology was 'the very least that the British public deserve', while Treasury minister Dan Tomlinson branded the motion 'absurd'.
