Reeves’s committee appearance suggests new line of defence over Budget income tax planspublished at 13:29 GMT
13:29 GMT
Faisal Islam
Economics editor
Earlier today – while appearing in front of the Treasury Select Committee – Chancellor Rachel Reeves came under pressure from MPs over both the accuracy, and an array of leaks and briefings, around the Budget.
She said they were “unacceptable”, that there was “too much speculation”, and that she was “frustrated” with damaging leaks.
There is an inquiry. However, a top Treasury official also confirmed that a previous leak inquiry had concluded that journalists were merely speculating about measures.
The chancellor was focussed on one leak in particular however, which she said was not an authorised briefing.
This was the Financial Times’s reporting of an apparent reversal on raising income tax rates, which she said was “partial and inaccurate” and gave the impression she was not going to significantly increase headroom.
This saw a notable gilt response, which is why Downing Street then made clarificatory statements. There is still some detail to unpick here.
It suggests some interesting new lines of defence about why the government changed tack on an income tax rate-related plan that was sent to the Office for Budget Responsibility (OBR) in early November.
The chancellor pointed to the fact that the OBR would have analysed this tax rate policy and reported back to the Treasury on 11 November.
She also defended her focus in a key speech on the negative impact of the OBR downgrade to productivity, rather than offsetting increases in forecast tax revenues related to higher inflation.
She pointed out that cutting inflation was an aim of some of the Budget process.
The chancellor is suggesting, in essence, that the negative impact of the productivity downgrade was much more certain than the positive impact of inflation on tax revenues.