Transport Secretary Heidi Alexander denies Budget leaks damaged economy

Transport Secretary Heidi Alexander denied pre-Budget leaks were damaging the economy after criticism that speculation was “causing paralysis among businesses and consumers”.

Recent months have been dominated by media reports about what taxes could be increased, with a number of potential measures being introduced by the government.

Speaking on the BBC’s Laura Kuenssberg program on Sunday, Andy Haldane, the former chief economist at the Bank of England, said this was “the biggest reason for this”. [economic] “Growth followed a horizontal course.”

In response, Alexander said there was always speculation about Budgets but the Chancellor was clear about his priorities.

Chancellor Rachel Reeves is expected to increase taxes in her Budget on Wednesday to help plug a multi-billion pound gap in spending plans.

Ministers have given strong signals that the government plans to increase income tax rates.

Anonymous briefings to the media from government sources had also suggested that Reeves was considering this move; This would be a clear breach of Labour’s election promise not to increase “basic, higher or additional rates of income tax”.

But last week Government sources said Reeves decided against it after better-than-expected economic forecasts.

Governments sometimes choose to leak aspects of their Budget plans to the media, either to test public reaction or to prepare the ground for measures to avoid a shock to financial markets or voters.

Haldane described months of speculation about potential Budget measures as a “fiscal fandango”.

“This has been costly for the economy,” he told the programme.

“It caused paralysis among businesses and consumers.”

He said the budget process was “too long, too leaky, and with real costs.”

Haldane acknowledged that this “pantomime” had also occurred under previous governments, adding that “the budget process had been broken down for many years”.

Asked whether the leaks were hurting the economy, Alexander told the programme: “People always speculate ahead of a Budget and we’ve always said, ‘Wait until the Budget’.”

Defending the government’s approach, he said the Budget process was taking place “on shifting sands”. decrease in productivity forecasts and “a very challenging global economic environment.”

The Conservatives called for an investigation into the pre-Budget leaks, saying they had “real world consequences, including on financial markets”.

In his letter to the most senior officer of the TreasuryShadow Chancellor Mel Stride said: “Either ministers have approved widespread briefing of classified information about the Budget, or serious unauthorized leaks have occurred within your department.”

The chancellor is expected to introduce a series of small tax increases in his budget after abandoning rising income tax rates.

But the government did not ignore The freeze on income tax thresholds is being extended – the level at which people start paying taxes or have to pay higher rates.

The freeze means that any wage rises will mean people will pay more tax, with more people being pushed into a higher tax band or having to pay tax on their income for the first time.

Reeves also said the focus would be on reducing the cost of living. Rail fares in England will be frozen next year for the first time in decades, the government has announced.

Other priorities identified by the Chancellor include reducing NHS waiting lists and the national debt.

Meanwhile, It is also expected to remove the two-child allowance limit.This is a limit that means parents can only claim universal credit or tax credit for their first two children.

There is pressure from Labor MPs to lift the cap, which was introduced under the Conservatives and could cost more than £3bn.

Alexander, who refused to confirm the cap would be lifted, said tackling child poverty was “in the DNA of the Labor Party”.

“For me, one of the defining elements of this government is about what we can do to ensure that children’s chances in life are not determined by the size of their parents’ bank balance,” he added.

While the Conservatives oppose lifting the cap, Stride told the BBC it was “a matter of fairness” that parents on benefits should make the same choices as those who are not about whether they can afford a larger family.

The shadow chancellor told Kuenssberg: “The big choice in this budget at the moment is whether the chancellor has the backbone to control government spending, particularly in the welfare area where some of the costs are out of control, to make those difficult choices and therefore not have to start reimposing taxes in areas that will damage the economy.”

But Green Party leader Zack Polanski said removing the cap would be a “victory” and that it was “outrageous that it took this long for the Labor government to do it”.

He called on the government to “tax the rich” instead of “putting people out of work or hitting people who are working really hard while their wages aren’t rising”.