Budget 2012 - Treasury Contents


7  Leaks and advance briefing

139. Last year in our Budget Report we deprecated both leaks and advance briefing of Budget announcements:

    It has been noticeable over many years under successive Governments that measures appear to have been trailed, sometimes accurately, sometimes in a way designed to place them in the most favourable light. Whether particular press reports are leaks or briefings or merely press speculation, we have no view, but we deprecate both leaks, and any advance briefing. Such activities are corrosive of good government. We will return to this issue at future autumn statements and budgets.[242]

Regrettably, the Treasury chose not to address this conclusion in its response to our Report.

140. This year a considerable number of the announcements in the Budget speech appeared in the press in advance of the Budget on 21 March. For example, on 14 March press reports appeared that the Government would in the Budget announce that the Debt Management Office (DMO) would be consulting on issuing 100 year and perpetual government bonds.[243] On 17 March the Herald reported that the Government would in the Budget announce a guarantee on the future of tax relief on North Sea decommissioning costs.[244] Both these stories were attributed to a Treasury source. On 19 March the cut in the additional rate of income tax from 50p to 45p was reported.[245] On the morning of the Budget itself, the Financial Times reported that the rate of stamp duty on homes over £2 million would increase from 5 per cent to 7 per cent.[246]

141. We asked the Chancellor whether any of the measures in the Budget were briefed to the press. He responded:

    In terms of the contents of the Budget, clearly some parts of the Budget were in the newspapers before I delivered the Budget. I think every single Budget that I've seen in the 20 or so years that I've been involved in politics has involved a lot of speculation beforehand. Sometimes entire Budgets have leaked and sometimes that speculation has been very well informed. What I can confirm to the Committee is that no Treasury official, no Treasury Minister and no Treasury special adviser briefed before the Budget any specific information on tax rates or tax allowances.[247]

The Chancellor also confirmed, however, that the Treasury "did engage with the press" on the North Sea decommissioning relief and that he had authorised the Treasury press office to brief the press about the DMO consultation on 100-year and perpetual bonds.[248]

142. With particular reference to the DMO consultation, the Chancellor said that:

    I draw a distinction. You have a perfectly legitimate concern, and I have a concern, about things like rates of income tax and personal tax allowances, some of which did appear in the press beforehand, but the fact that the Debt Management Office is going to consult in the future on gilt maturities is the sort of thing that, frankly, the Treasury and every other Government Department engages with the press on every day—I would not regard that as Budget purdah, it is not on the score card. I am talking about, and I suspect your Committee is concerned about, what pertains to things in the classic definition of a Budget and what is on the score card.[249]

143. Paragraph 9.1 of the Ministerial Code, under the heading 'Ministers and Parliament', reads:

    General principle

    9.1 When Parliament is in session, the most important announcements of Government policy should be made in the first instance, in Parliament.

We asked the Chancellor whether briefing the press on the DMO consultation on gilts conflicted with the Ministerial Code. He replied that:

    I certainly agree that important announcements of Government policy should be made to Parliament but, in the case you are citing, this is talking about the fact that the Government might, at a future date, bring forward a consultation on their gilt policy. That is not—I would hazard to argue in front of you, Chair—something that has to be done in an oral statement to Parliament; it could easily be in the kind of material in a speech that I would give, whether at the Mansion House or anywhere else.[250]

144. As we have seen above, the Chancellor assured us that no Treasury minister, official or special adviser briefed before the Budget any specific information on tax rates or allowances. He noted that there had been leaks of Budget measures in previous years. He assured us that "I completely agree that it would be much better if the announcements that I referred to—on stamp duty, personal allowances and the like—had been made on Budget day".[251] He claimed, however, that the Budget process he had to deal with was materially different from that experienced by his predecessors for two reasons:

    Two things have changed [...]. First, I must agree my major Budget measures well over a week in advance. On the Monday before the Budget—not the Monday of the Budget week, but 10 days in advance—I must give the Office for Budget Responsibility the major Budget measures, and by Friday I have to have confirmed absolutely everything. No Chancellor has had to do that before. [...] Because of the OBR process, which I think is a good process, the Budget exists 10 days before it is given.

    The second thing is that I must negotiate in a coalition. Inevitably, a process whereby the Chancellor came up with a Budget in secret with the Treasury, occasionally consulted the Prime Minister, and perhaps intensely engaged the Prime Minister in the last couple of days before the Budget was given was very different from a process in which I must engage two political parties to make sure that I have their consent to proceed [...]. This is genuinely not pointing the finger at any individual, but many more people know in a coalition what will be in a Budget because I need to get the consent of both political parties.[252]

145. The Permanent Secretary, Sir Nicholas Macpherson, told us that the culture of Budget secrecy had changed in the time since he had first been involved in Budgets in the 1980s:

    I think it fair to say that that culture has changed over time. [...] The Budget process of the 1980s was different from how it has evolved over the past 15 years. The convention in those days was that there was extraordinary secrecy about nearly every aspect of the Budget. [...] The culture of politics has changed. If I were stuck in 1980s-think, I would probably be utterly appalled by what goes on now, but the reality is that through the 1990s and 2000s, the way in which the Government of the day engaged with the media changed. I do not think that is a bad thing. Exposing policy, ventilating ideas and encouraging debate is all to the good.[253]

146. Sir Nicholas told us that he had not initiated a leak inquiry within the Treasury as he did not have the prima facie evidence to warrant one.[254] He told us that:

    There are usually tell-tale signs about where things come from. Having looked at the stories and the relevant facts around them, I am confident that they didn't come from Treasury sources.[255]

When asked, the Chancellor endorsed the decision of his Permanent Secretary.[256]

Conclusions

147. In his discussion of leaks and advance briefing the Chancellor attempted to draw a distinction between announcements upon which he thought it was normal for the Treasury to brief the press in advance, but not formally announce for consultation, and Budget announcements, involving tax rates or allowances, which he maintained should not be revealed in advance. He and the Permanent Secretary pointed to the occurrence of leaks in the past and to the change in recent years in the culture of Budget secrecy. Although the Chancellor expressed regret at the leak of information on Budget tax changes, he appeared to be resigned to a greater risk of such information leaking because the Budget is completed earlier than in the past and because there is coalition government. We find all these arguments unconvincing.

148. We reject the suggestion that it is acceptable for Budget measures to be briefed to the press in advance. Public trust in politics is low, and is further eroded if people have grounds to think that announcements about important things affecting them are simply part of a Government media operation. Such an approach would appear to breach the long standing convention, supported by the Ministerial Code, that major announcements should first be made to Parliament. The Government might also incorrectly assess the market sensitivity of information it decides to release.

149. Appropriate pre-Budget consultation on specific measures, especially in the tax field, is to be welcomed. It is possible that there may also be cases where the Treasury judges it necessary to canvass views about a measure intended for the Budget which has not been out put out for consultation. Information about such measures should be publicly released by the Treasury in the normal way and, as appropriate, accompanied by a written or oral parliamentary Statement.

150. While there was no golden age when Budget measures never leaked, that is not an reason for accepting their occurrence. Budget leaks in the past have, rightly, provoked measures to prevent them happening. The Chancellor claims to be operating under circumstances that make leaks more of a risk: the need to complete his Budget some days in advance so that the OBR can study it, and the existence of coalition government. The first of these is no reason on its own for leaks to be more likely, and there is no suggestion that the OBR has been the cause of any leak of information. As for the coalition being a factor, that is also a weak argument. While more people may be aware of the contents of the Budget, this is a risk that can be managed. The Treasury has Ministers of both parties within the coalition and is clearly capable of discussing Budget measures internally without leaking them, since the Chancellor and Permanent Secretary are both confident that no leak occurred from any Treasury minister, special adviser or official. The Government as a whole should similarly be capable of devising ways of discussing what may be in the Budget without leaking it. The Committee repeats the condemnation of leaks of Budget measures stated in our Report last year; such leaks are corrosive of good government.

151. Coalition government is not a justification for Budget leaks. We recommend that the Government review its practices, based on the experience of this Budget, for preserving Budget confidentiality in a coalition context.


242   Tenth Report of Session 2010-12, Budget 2011, HC 897, paragraph 4 Back

243   See: Osborne budget plan could mean never having to pay his debts, The Guardian, 14 March 2012 (http://www.guardian.co.uk/uk/2012/mar/13/budget-government-bonds-debt-osborne); Government mulls issuing perpetual gilts, Reuters, 14 March 2012 (http://uk.reuters.com/article/2012/03/14/uk-britain-bonds-idUKLNE82D00920120314) Back

244   Osborne will throw lifeline to North Sea oil industry, The Herald, 17 March 2012 (http://www.heraldscotland.com/mobile/politics/political-news/osborne-will-throw-lifeline-to-north-sea-oil-industry.17044925?_=e72a32b81af08da32dc6250f14ff025ff99ee615) Back

245   George Osborne to reduce top rate of tax to 45p, The Daily Telegraph, 19 March 2012 (http://www.telegraph.co.uk/finance/budget/9152102/Budget-2012-George-Osborne-to-reduce-top-rate-of-tax-to-45p.html) Back

246   Tax grab on London's top homes, Financial Times, 21 March 2012 (http://www.ft.com/cms/s/0/8846f682-72c1-11e1-ae73-00144feab49a.html#axzz1qPHcCmxs) Back

247   Q 241 Back

248   Qq 242-4; Qq 246-53 Back

249   Q 247 Back

250   Q 250 Back

251   Q 264 Back

252   Q 258 Back

253   Qq 272-4 Back

254   Q 281 Back

255   Q 280 Back

256   Q283 Back


 
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© Parliamentary copyright 2012
Prepared 18 April 2012