Transport Secretary Heidi Alexander has defended the government's pre-Budget process, describing it as taking place on 'shifting sands' amid growing criticism of the weeks of speculation surrounding Chancellor Rachel Reeves's upcoming financial statement.
Budget process under fire
The controversy emerged as Speaker of the House Lindsay Hoyle criticised what he termed the 'hokey cokey' Budget, calling out ministers for leaking key announcements ahead of Wednesday's formal statement. This comes after Rachel Reeves abandoned expected plans to increase income tax rates following improved economic forecasts.
When questioned on BBC's Sunday With Laura Kuenssberg about whether tax rise speculation had damaged the economy, Ms Alexander stated: 'The review that the Office for Budget Responsibility have done about the productivity forecasts has meant that this whole process has really taken place on shifting sands to start off with, and we've got a very challenging global economic environment.'
Former Bank of England chief economist Andy Haldane added to the criticism, describing the 'fiscal fandango' of recent months as causing 'paralysis' among businesses and consumers.
Electric vehicle taxation controversy
In a significant development, Ms Alexander declined to deny that the Chancellor is planning a pay-per-mile scheme for electric vehicle drivers, even as the government adds £1.3 billion to a grant reducing upfront costs for EV buyers.
'We need a fair vehicle taxation system for all motorists,' the Transport Secretary explained, 'because EVs, like drivers of petrol and diesel cars, they're driving on roads that require maintenance.'
The Chancellor has pledged to tackle the cost of living crisis in her Budget, writing in The Sunday Times that making people better off represents a 'fundamental precursor to economic growth'. However, she faces the challenge of weak economic growth, persistent inflation and expected downgrades to official productivity forecasts.
Expected Budget measures and reactions
Among the anticipated measures, rail fares are set to be frozen for the first time in 30 years, saving commuters on more expensive routes over £300 annually. Conversely, an extension of the income tax threshold freeze could see more people paying tax for the first time or moving into higher rate brackets.
Tory leader Kemi Badenoch challenged the Chancellor to 'have the balls' to admit such moves would breach Labour's manifesto promise not to raise taxes on working people.
Other expected announcements include:
- Scrapping the two-child benefit cap at a cost exceeding £3 billion
- £48 million funding for 350 new planners to support building 1.5 million new homes
- Guaranteed full student loan support for all care leavers, worth up to £13,500 each
- £5 million for secondary school library books
- £18 million scheme to revamp English playgrounds
- A crackdown on shops selling illegal vapes
Shadow chancellor Mel Stride urged the Chancellor to explain 'how she is going to control public spending, particularly welfare', while Reform UK's Zia Yusuf accused the government of 'prioritising foreign nationals' by raising taxes on UK citizens.
Green Party leader Zack Polanski described scrapping the two-child benefit cap as a 'victory' but urged the Chancellor to go further and 'tax the rich'.
