Rachel Reeves has condemned leaks before her make-or-break budget as “unacceptable” as she revealed her income tax U-turn was agreed in partnership with Keir Starmer. Defending her tax and spending plans before MPs on the Commons Treasury committee, the chancellor said she had been frustrated by “leaks that were clearly not authorised” before her November speech.
“I want to reiterate in the strongest terms that leaks are unacceptable,” she said. “The budget had too much speculation, there were too many leaks, and much of the leaks and speculation were inaccurate. [It was] very damaging, as well as the IT security issues.”
Reeves said she was “absolutely categorical” there had been no authorised briefing, but said she and the prime minister had been preparing to announce an income tax rise before abandoning 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 said her plans had been formed “in close partnership” with Starmer, whom she met two to three times a week in the run-up to the budget. “We decided it together as a team because that is what the prime minister and I am.”
Reeves said she reserved the right to return with fresh tax increases or spending cuts in the event of a fresh deterioration in the public finances – including in the spring – but downplayed the likelihood. She noted that almost £22bn of headroom against her fiscal rule at the autumn budget, alongside her decision to scrap an OBR verdict on whether the target was still being met in the spring, helped avoid immediate action.
The chancellor also ruled out charging capital gains tax on primary residences and scrapping the pensions triple lock in the current parliament. She said the government planned to introduce legislation at the earliest possible opportunity to ensure her tax changes were enacted, including a new council tax surcharge on properties worth more than £2m and a 3p-a-mile levy on electric vehicles.
