Minister Defends Before 72 Hours Budget Secrecy Amid Leak Backlash: ‘No Economic Harm Done’ Critics Cry ‘Damage Already Done
Transport Secretary Heidi Alexander has dismissed suggestions that weeks of Minister Defends Budget leaks and tax speculation have damaged the UK economy, after former Bank of England chief economist Andy Haldane claimed the uncertainty had “caused paralysis among businesses and consumers”.
Haldane told the BBC’s Sunday with Laura Kuenssberg programme that the continuous stream of briefings about possible tax rises was the “single biggest reason” economic growth had stalled. He described the months leading up to the Budget as a “fiscal fandango” and said the process had become “too lengthy, too leaky, with real costs”.
Alexander rejected the criticism, saying speculation is common before a Budget and insisting Chancellor Rachel Reeves had been clear about her priorities.
Weeks of rumours over tax rises
Reeves is expected to announce a series of tax increases on Wednesday to plug a multibillion pound gap in spending plans. For weeks, ministers and government sources had signalled that income tax rates were under consideration, despite Labour’s election promise not to raise the basic, higher or additional rates.
Anonymous briefings had suggested Reeves was preparing to break that pledge, but government sources later said she had ruled out income tax rises after receiving stronger than expected economic forecasts.
Governments often release elements of Budget plans in advance to test public reaction or calm financial markets, but Haldane said this year’s process had turned into a “pantomime” that had also happened under previous governments.
Challenged on whether the leaks had harmed the economy, Alexander said, “People always speculate in advance of a Budget and we have always said wait until the Budget.” She added that planning had taken place “on shifting sands” amid productivity downgrades and global economic challenges.
Calls for investigation into Budget leaks
The Conservatives have demanded an inquiry into the leak culture surrounding the Budget. Shadow chancellor Mel Stride wrote to the Treasury’s permanent secretary, saying the situation had “real world consequences including for financial markets”.
Stride said ministers either approved widespread briefings of confidential information or “serious unauthorised leaks” had taken place within the Treasury.
The chancellor is now expected to announce a series of smaller tax rises rather than an increase to income tax rates. The government has not ruled out extending the freeze on income tax thresholds beyond 2028 to 2029. The freeze means many workers pay more tax as their wages rise, while more people are pulled into higher bands.
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Cost of living and public services central to Budget
Reeves has said the Budget will focus on bringing down the cost of living. The government announced last week that rail fares in England will be frozen next year for the first time in decades.
Other priorities the chancellor has set out include reducing NHS waiting lists and lowering the national debt.
She is also expected to scrap the two child benefit cap, which restricts universal credit and tax credit payments to a family’s first two children. The policy, introduced by the Conservatives, has long been criticised by Labour MPs. The Institute for Fiscal Studies estimates removing the cap could cost more than three billion pounds a year.
Alexander declined to confirm whether the cap would be lifted but said tackling child poverty was “in the DNA of the Labour Party”.
“One of the defining elements of this government is about ensuring that children’s chances in life are not determined by the size of their parents’ bank balance,” she said.
Debate intensifies over welfare and taxation
Conservatives argue the cap should remain. Stride said it was “a matter of fairness” that parents receiving benefits face the same decisions about family size as those who are not.
He told Kuenssberg that Reeves must show “backbone” and control government spending to avoid tax rises that “could damage the economy”.
Green Party leader Zack Polanski said scrapping the cap would be a “victory” and criticised the government for moving too slowly. He repeated his call for ministers to “tax the rich” instead of increasing pressure on lower income households.
Labour MP John McDonnell, a former shadow chancellor, said he hopes Reeves will deliver a “redistributive Budget”.
“The heaviest weight should fall on the broadest shoulders,” he said. “That means tax rises for the wealthiest, for corporations and for those making massive profits.”
Asked about divisions within Labour, McDonnell said, “We can do what we want in terms of getting stuff through Parliament. Yet we seem to be hindered by a lack of direction and some elements of competence as well.”
