Reeves blamed for ‘glaring error’ on tax in stinging attack by Labour Treasury watchdog ...Middle East

Rachel Reeves made a “glaring error” by suggesting she would hike income tax and then changing her mind, one of Labour’s most senior MPs has said in a warning to the Chancellor not to repeat the mistakes of the recent Budget.

Dame Meg Hillier, the chair of the House of Commons’ cross-party Treasury committee, said the behaviour of the Government in the run-up to the Budget was “akin to throwing several grenades on to the pitch”.

And she warned Reeves that the next head of the Budget watchdog must be fully independent from the Treasury – or her committee will veto the Chancellor’s choice.

The Treasury committee is launching an inquiry into the Office for Budget Responsibility (OBR) following the watchdog’s accidental leak of her plans before Reeves had delivered them, in a bid to discover whether the body is sufficiently “reliable and independent”.

In an article for The i Paper announcing the inquiry, Hillier – who was a close ally of Reeves when Labour was in opposition – attacked the Treasury’s handling of the Budget process.

She paid tribute to the Chancellor’s “resilience”, but added: “What I would like to see more, though, is an acknowledgment of what didn’t go well.”

Hillier said that while Treasury “pitch rolling” – which sees officials tip off the media and businesses about likely major changes to tax and spending – is a valid way to avoid market volatility, she complained that this year’s build-up “was less a rolling of the pitch and more akin to throwing several grenades on to the pitch”.

The committee chair singled out the decision by Reeves to hint that she was planning to raise income tax before abandoning the idea. Hillier said: “In itself, this isn’t what the process for a Budget should ever be, but what’s worse is the Government then changed its mind, which left everyone either confused or annoyed. This was a glaring error and one from which all at the Treasury must learn.”

And she concluded: “The Chancellor has wanted this job for most of her life. It is her responsibility to identify and accept the mistakes made within the process she leads and make sure they do not happen again.”

Throughout the run-up to the Budget on 26 November, the Treasury adopted a policy of refusing to respond to media questions about its contents, although the Chancellor did a number of interviews and a highly unusual speech timed to be carried by breakfast TV programmes.

Reeves has firmly denied authorising her team to brief the press on what would be in the Budget and has ordered a leak inquiry into how news of the U-turn on income tax emerged.

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In the new year the Chancellor will begin the process of finding a new chairman of the OBR, after Richard Hughes resigned in response to the accidental early publication of the Budget.

Hillier said: “I expect the Chancellor to take particular care in appointing someone with a clear, generous distance from the Treasury, and that consideration will form a significant part of our decision to consent or veto when the time comes.”

A Treasury spokesman said: “This Government is committed to protecting the independence of the OBR and the integrity of our fiscal framework and institutions. Their role in holding governments to account is crucial, which is why the first bill passed by this Government included the fiscal lock, which prevents the side-lining of the OBR.”

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