That was why Civic Clean Chancellor Rachel Reeves welcomed our call for an inquiry into the recent pre-Budget leaks from the Treasury. These leaks have dramatically undermined business and consumer confidence. The leaks rattled the global bond markets and subsequently forced drastic increases in the interest rates demanded by investors on UK debt. In reply, Speaker Sir Lindsay Hoyle was vigorous in his rage, condemning the turn of events as the “hokey-cokey Budget.”
The leaks led to one of the largest waves of destructive self-financing in history—if not the greatest. As a consequence, hundreds of thousands of people pulled their pension savings before the predicted rumoured Budget Day announcement. Mark FitzPatrick, chief executive of St James’s Place, remarked on the negative consequences of speculation surrounding the Budget, stating, “The flying of kites is unhelpful when it affects people’s lives.”
Yet Chancellor Reeves’ Treasury ministry team has certainly been behind the leaks, creating dangers about political accountability inside government. Speaking in a Commons session, James Murray, chief secretary to the treasury, went further and made this remarkable admission. He further played up the level of government commitment to achieving security of the Budget. He explained that strong precautions have been taken to prevent leaks of sensitive information. He did not want to get into hypotheticals about where the inquiry may lead.
“not speculate on the outcome of the leak inquiry” – Mr Murray
Sir Lindsay Hoyle reiterated a fundamental principle of parliamentary procedure, reminding the government that policy announcements should be made first to the Commons. His remarks are indicative of a deepening impatience among MPs on how Budget-related content is judged, created and disseminated. Meg Hillier MP, Chair of the Public Accounts Committee, has previously questioned the usefulness of leak inquiries. As she noted, “Leak investigations always seem to end with no one being held accountable. But if someone is held accountable, will they take inspiration from Richard Hughes’ example [and step down]?”
The inquiry comes in light of an earlier incident when Richard Hughes, former head of the Office for Budget Responsibility, resigned following a leak that preceded a critical Budget announcement. New concerns over the pandemic’s response have brought a new wave of focus on government transparency and practice.
The latter three are crucial, especially in light of UK productivity forecasts recently downgraded by the office for budget responsibility. This new development just deepens and complicates the economic landscape. Notably, a plan to raise income tax rates was leaked before being abandoned, highlighting the volatility surrounding fiscal policy discussions.
Chancellor Reeves and her team are facing increasing scrutiny as the inquiry continues. They need to move urgently to restore public confidence in our governments’ communications and management of fiscal policy. While these leaks might have immediate adverse market reactions, their repercussions cut far deeper. They undermine the ability and legitimacy of the Treasury to be at the forefront of managing our national economic affairs.