Chancellor Rachel Reeves has condemned leaks ahead of her first budget as 'unacceptable', revealing that her decision to abandon an income tax rise was taken in partnership with Prime Minister Keir Starmer. Speaking to the Commons Treasury committee, Reeves said she was frustrated by unauthorised briefings, which she described as damaging and largely inaccurate.
In the weeks before the budget, speculation had mounted that Reeves would break a manifesto pledge by raising income tax to plug a shortfall in public finances. However, a Financial Times report led to a sharp sell-off in bond markets after the plan was dropped, raising investor concerns over the government's fiscal credibility.
Reeves insisted there had been no authorised briefing on the income tax U-turn, stating that she and Starmer had considered raising rates but ultimately decided other tax measures generated sufficient revenue. 'We decided it together as a team,' she said, noting that she met the prime minister two to three times a week during the budget preparation.
Richard Hughes, chair of the Office for Budget Responsibility, resigned after taking responsibility for the early release of budget documents. Reeves said a replacement was unlikely before her spring statement, and both the Treasury and the OBR are conducting leak inquiries.
The chancellor revealed she had left nearly £22bn of headroom against her fiscal rule in the autumn budget, giving her confidence that further tax rises or spending cuts would not be needed in the spring. However, she reserved the right to take action if the public finances deteriorate further.
Reeves ruled out charging capital gains tax on primary residences or scrapping the pensions triple lock in this parliament. She plans to introduce legislation quickly to enact tax changes, including a council tax surcharge on properties over £2m and a 3p-per-mile levy on electric vehicles, to reassure markets of the government's commitment to its fiscal plans.
