Budget leaks spark debate as Reeves weighs tax rises and living-cost measures

Transport Secretary Heidi Alexander has rejected claims that leaks ahead of the Budget harmed the economy, responding to criticism that speculation has "paralyzed businesses and consumers".

In recent months, media chatter has centred on possible tax rises as ministers signal potential measures.

Former Bank of England chief economist Andy Haldane told INLIBER's Sunday with Laura Kuenssberg programme that speculation has "the single biggest reason why growth has flatlined".

Alexander argued that speculation is common before a Budget and that the chancellor has been clear about priorities.

Chancellor Rachel Reeves is expected to announce a package of smaller tax increases in the Budget to close a multi-billion-pound gap. Early indications pointed to higher income tax, but sources later said Reeves scrapped the plan after stronger forecasts.

Leaking ahead of Budgets is a common tactic to test public reaction or to prepare financial markets.

Haldane described the pre-Budget speculation as a "fiscal fandango" that has cost the economy, saying it has paralyzed businesses and consumers. He argued the Budget process is too lengthy and too leaky, having degraded over many years.

Alexander said speculation is a normal part of the process, noting the Budget has been set against shifting sands, lower productivity forecasts, and a challenging global environment.

The Conservatives have called for an inquiry into pre-Budget leaks, arguing they have real-world consequences for markets. Shadow chancellor Mel Stride urged the Treasury to confirm whether ministers approved the briefing or if there were unauthorised disclosures.

The chancellor is expected to unveil a package of smaller tax rises, while keeping the income tax thresholds frozen, which could push some workers into higher bands as wages rise.

The government has also pledged to freeze rail fares in England next year for the first time in years and to tackle NHS waiting lists and the national debt.

There is ongoing debate about scrapping the two-child limit for tax credits and universal credit. Labour MPs have pressed for removal, with the Institute for Fiscal Studies estimating a cost exceeding £3bn. Alexander said tackling child poverty is in the Labour DNA, while Stride argued it is a fairness issue for those on benefits as well.

Labour figures push for a redistributive Budget with higher taxes on the wealthiest and on profitable firms, while opponents warn against tax rises that could slow growth.

Former Labour shadow chancellor John McDonnell said Reeves should deliver a redistributive Budget with heavier taxation on the richest and on corporations to fund priorities.

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Summary: Pre-budget leaks shape expectations and markets, while the government weighs revenue choices and living-cost measures ahead of the Budget. BBC News

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