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Rachel Reeves has condemned leaks before her make-or-break budget as \u201cunacceptable\u201d as she revealed her income tax U-turn was agreed in partnership with Keir Starmer.<\/p>\n
Defending her tax and spending plans before MPs on the Commons Treasury committee, the chancellor said she had been frustrated by \u201cleaks that were clearly not authorised\u201d before her November speech.<\/p>\n
\u201cI want to reiterate in the strongest terms that leaks are unacceptable,\u201d she said. \u201cThe 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.\u201d<\/p>\n
In the run-up to the budget the chancellor gave a set-piece speech<\/a> that was widely interpreted as preparation for a manifesto-busting income tax rise to help plug a shortfall in the public finances.<\/p>\n However, the Financial Times reported less than a fortnight later that the plan had been dropped, triggering a sharp sell-off in bond markets<\/a> amid investor concerns over the government finances.<\/p>\n Reeves said she was \u201cabsolutely categorical\u201d there had been no authorised briefing, although she 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.<\/p>\n \u201cWe did look at whether we needed to increase the rates of income tax given our concerns around the forecast \u2026 In the end that was not necessary,\u201d she said.<\/p>\n The chancellor said her plans had been formed \u201cin close partnership\u201d with Starmer, whom she met two to three times a week in the run-up to the budget. \u201cWe decided it together as a team because that is what the prime minister and I am.\u201d<\/p>\n In the chaotic weeks after the budget, the chair of the Office for Budget Responsibility (OBR), Richard Hughes, resigned<\/a> after taking responsibility for the inadvertent early release of its budget documents just before Reeves stood up to announce her measures in the Commons.<\/p>\n Reeves said a replacement for Hughes was unlikely to be found before her spring statement, amid efforts to hire a replacement early in the new year. The Treasury and the independent watchdog are also in the process of undertaking leak inquiries<\/a> after a series of briefings and gaffes.<\/p>\n The chancellor 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 \u2013 including in the spring \u2013 but downplayed the likelihood.<\/p>\n Reeves said this was helped by leaving almost \u00a322bn 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.<\/p>\n \u201cI reserve the right to be able to take action at any point. But I believe the headroom we have, and the changes we have made, means we won\u2019t have to take that action in the spring. But of course I reserve the right at any time to take action.\u201d<\/p>\n