Reeves cleared of ethics probe for pre-Budget remarks

Chancellor Rachel Reeves will not be subjected to a probe by the prime minister's ethics advisor regarding potential breaches of the ministerial code linked to her comments before the Budget.

Nigel Farage, leader of Reform UK, had requested Sir Laurie Magnus to investigate, claiming Reeves failed to adhere to rules demanding ministers provide transparent and accurate information. Farage argued that she did not give Parliament a "complete and truthful account" of the country's finances ahead of the Budget.

Reeves denied any wrongdoing, maintaining she had been candid about the financial options available. In the lead-up to the 26 November Budget, she repeatedly warned that revised forecasts indicated lower economic productivity, implying the nation's finances were in a more precarious state than previously reported. However, she did not highlight that the Office for Budget Responsibility (OBR) had recorded higher-than-expected tax revenues, which partially offset the lower productivity figures.

Opposition parties, including Reform and the Conservatives, suggested that Reeves intentionally painted a gloomier picture to justify new tax increases aimed at funding welfare enhancements.

Farage's letter to Sir Laurie stated: "The chancellor conducted a sustained public and media campaign portraying the public finances as being in a state of collapse to prepare political ground for approximately 30bn of tax increases, which, according to the OBR, were discretionary rather than unavoidable. The British public now faces the highest tax burden in generations based on what appears to be a consistent misrepresentation of the fiscal situation."

In response, Sir Laurie clarified that he could not investigate collective government actions or individuals outside ministerial roles, nor could he address issues of market regulation, which fall under the Financial Conduct Authority (FCA).

Meanwhile, Conservative shadow chancellor Sir Mel Stride had urged the FCA to look into potential market misuse due to pre-Budget leaks, which included proposals on freezing income tax thresholds, a pay-per-mile EV levy, and a tourist tax. Stride noted that these confidential details seemed to have been leaked and misused, affecting markets, businesses, and households.

The FCA has yet to initiate an inquiry, emphasizing that government communication practices are overseen by Parliament. It has requested information on a Treasury-led leak investigation conducted earlier in the week.

During a committee session, a senior OBR official stated that Reeves was not misleading when she described the public finances as "very challenging" prior to the Budget. Prof David Miles explained that, despite the better-than-expected tax receipts, the chancellor still faced difficult fiscal decisions. He also noted that the OBR found leaks to the media "unhelpful."

Author: Benjamin Carter