Crucial Office for Budget Responsibility analysis on Rachel Reeves’ plans available online before the chancellor’s budget statement.
LONDON — A vast swathe of Britain’s tax-hiking budget leaked almost an hour ahead of time Wednesday, in an apparent Whitehall blunder that swiftly got the opposition Conservatives demanding an inquiry.
Scrutiny documents posted on the website of Britain’s fiscal watchdog the Office for Budget Responsibility (OBR) — normally made public once Chancellor Rachel Reeves sits down following a House of Commons speech — laid bare the impact of Reeves’ latest tax-and-spend statement on the British economy, and detailed a raft of the policy measures she had planned.
The market sensitive documents have since been removed, but the OBR has now launched an internal investigation. A Treasury spokesman said after the budget that Reeves has confidence in OBR boss Richard Hughes.
In the event, Reeves’ measures amounted to £26 billion-worth of tax rises — and will see the U.K.’s tax take climb to a record 38 percent as a proportion of GDP by 2031.
The British economy is forecast to grow by just 1.5 percent over the OBR’s current forecast period, 0.3 percent slower than projected in March, with the watchdog blaming poor productivity growth.
Its growth projections for the current year are, however, up on March’s statement. “We beat the forecasts this year, and we will beat them again,” Reeves said of the mixed figures in her Commons statement.
Reeves ducked a headline-grabbing — and Labour manifesto-shredding — rise in the headline rate of income tax. But she will extend a freeze on the thresholds at which people are pulled into higher tax brackets until 2030, in a move long dismissed as a “stealth tax” by critics.
Reeves’ tax hikes will help the chancellor double her so-called fiscal “headroom” — the amount of buffer the Treasury has between its self-imposed fiscal rules to either up spending or slash taxes in the future — to around £21.7bn in five years’ time. Building up that leeway is seen in government as necessary to avoid endless speculation about tax increases every time a fiscal event takes place.
‘Punish those responsible’
Speaking in the House of Commons just before the budget announcement kicked off, Tory Leader Kemi Badenoch condemned the “unprecedented leak” and demanded an investigation to “punish those responsible.”
Prime Minister Keir Starmer rejected that call, stressing it was “literally about 25 minutes before the budget will be set out in full, where we’ll take further decisions. The chancellor will set it out.” Rising to her feet after Starmer, Reeves pointed the finger squarely at the OBR, saying: “This is deeply disappointing and a serious error on their part.”
The Office for Budget Responsibility said in a statement Wednesday: “A link to our Economic and fiscal outlook document went live on our website too early this morning. It has been removed.
“We apologise for this technical error and have initiated an investigation into how this happened.
“We will be reporting to our Oversight Board, the Treasury, and the Commons Treasury Committee on how this happened, and we will make sure this does not happen again.
“Our Economic and fiscal outlook and supporting documents will be released when the Chancellor has finished her speech.”
Other measures
The row risked overshadowing a crucial budget for Reeves.
Her second tax-and-spend statement in post comes at a torrid time for the governing Labour Party, which won a landslide election victory less than 18 months ago, but now finds itself languishing in the polls and facing internal unrest.
In a move designed to placate Labour MPs who extracted a major climbdown earlier this year on welfare reform, Reeves will fully abolish a two-child benefit cap introduced by the Conservatives in office.
The move will allow parents to claim extra state support for their third and subsequent children. The government told the watchdog the change — which comes with a multi-billion pound price tag — would slash child poverty by 450,000 by 2029-30.
Reeves said she would judge her “time in office a success if I knew that ordinary children from working class backgrounds were living more fulfilling lives” and argued that the “biggest barrier to equal opportunity is child poverty.”
“I don’t intend to preside over a status quo that punishes children for the circumstances of their birth,” Reeves said, to the biggest Labour cheers of the day.
The chancellor also confirmed she is hitting owners of expensive homes with a “high value council tax annual surcharge.” That will amount to £2,500 on homes worth more than £2 million, and rise to £7,500 for properties worth more than £5 million.
“This Labour government is changing our country in the face of challenges on our productivity,” Reeves said as she wrapped her speech. “I have asked everyone to contribute, yes, for the security of our country and the brightness of its future.”
Responding for the Tories, Badenoch said Reeves had “inherited an economy with inflation at 2 percent and record high employment. She has tanked it in just over a year.”
This story has been updated.