Major details from the Budget were leaked before Rachel Reeves presented her financial statement to the Commons. The Chancellor, who was observed checking a phone during Prime Minister’s Questions, was scheduled to reveal the Budget to MPs at 12:30 pm. However, there was an unexpected turn of events as the Office for Budget Responsibility (OBR) accidentally released its economic and fiscal report, outlining key measures in the Budget, ahead of Ms. Reeves’s speech.
Following the leak, a displeased Ms. Reeves criticized the OBR’s error, labeling it as “deeply disappointing” and “a serious mistake on their part.” She pointed out to MPs that it was their breach, for which they have taken responsibility.
The OBR document disclosed various Budget measures, including £26 billion in tax increases overall and the elimination of the two-child benefit restriction. The OBR later apologized for a “technical error” that led to the premature publication and initiated an investigation into the incident.
As per the document, the Budget will implement tax hikes amounting to £26 billion by 2029-30. This will involve maintaining personal tax thresholds at current levels for an additional three years until 2030-31, despite concerns raised by Ms. Reeves about the impact on working individuals. Additionally, the document confirmed the tax take will reach a record high of 38% of GDP in 2030-31.
Moreover, the document confirmed the removal of the two-child benefit limit starting from April next year. The announcement stated, “The Government has eliminated the two-child limit within UC from April 2026… Its removal will incur costs of £2.3 billion in 2026-27 and £3 billion in 2029-30.”
The OBR revised its economic growth forecast for the current year from 1% to 1.5% but adjusted downward its projections for the following four years.
Ms. Reeves had previously cautioned that extending the freeze on income thresholds would adversely affect workers. During last year’s Budget, she expressed her concerns to MPs, emphasizing the negative impact on working individuals.
The leak from the OBR was described as “unprecedented” by Tory leader Kemi Badenoch during Prime Minister’s Questions. Lib Dem leader Sir Ed Davey also queried the PM about the tax increases outlined in the OBR document.
In PMQs, Keir Starmer highlighted that the Budget would embody Labour values and cater to families concerned about the cost of living. He emphasized the importance of addressing the financial challenges faced by families and outlined initiatives such as free breakfast clubs, childcare, and school meals.
The OBR acknowledged the early release of its economic and fiscal outlook document, attributing it to a technical error. The OBR assured that an investigation was underway to prevent a recurrence and pledged to release the full report after the Chancellor’s speech.
