It hardly seemed possible that Rachel Reeves’s Budget could become even more of a shambles – but it happened. Details of her proposals, including £26bn in tax rises, leaked more than half an hour before she stood up to announce her plans in the House of Commons. This wasn’t one of those “leaks” that actually involved deliberately giving some of the details to journalists in advance. We’ve seen plenty of that happening over the past few weeks.
What happened today was a genuine mistake. The analysis by the Office for Budget Responsibility, the official Treasury watchdog, was published by mistake just before noon – around 40 minutes before the Chancellor was due to speak. It showed Rachel Reeves would impose tax rises of £26 billion, bringing them to an historic record high. There will be a tax raid on pension contributions worth £4.7 billion, a pay-per-mile levy on electric cars raising £1.4 billion, and gambling taxes raising £1.1 billion.
The two-child benefit cap is being removed at an estimated cost of £3 billion by 2029-30, according to the Office for Budget Responsibility.
Rachel Reeves’ Budget will extend the existing freezes to personal tax thresholds for another three years until 2030-31, the Office for Budget Responsibility’s published forecast document shows.
It’s embarrassing. But more than that, it really matters. This leak could actually make the UK poorer – and make further tax raises more likely.
That’s because the UK is in so much debt that the Treasury needs to worry constantly about what the people who lend us money – the bond markets – are thinking. If they have confidence that the Government is well-managed than it becomes cheaper for us to borrow.
But if the bond markets think that the UK is a shambles, that our Chancellor is incompetent and the Treasury cannot be trusted, then it becomes more expensive. But we have to borrow, whether we like it or not. That’s the mess the UK has got into.
Conservative leader Kemi Badenoch, speaking today, said this shambolic leak showed the “chaos” in the Government, and insisted that Prime Minister Sir Keir Starmer is ultimately to blame.
Sadly, however, it’s not just Labour that looks foolish today. It’s the UK as a whole, and that means we’ll all pay.
