MPs raise concerns about leak of hike in living wage in last budget

·3 min read
<span>Photograph: Stefan Rousseau/PA</span>
Photograph: Stefan Rousseau/PA

MPs have expressed “deep concern” over the leaking of price-sensitive information before Rishi Sunak’s budget last year and warned the chancellor his package of measures risked adding to Britain’s already surging inflation rate.

The influential all-party Treasury committee called for Sunak to investigate how details of a planned increase in the national living wage to £9.50 an hour were disclosed in the runup to the budget in late October.

“We are deeply concerned that the rate of the national living wage was disclosed to ITV in an unauthorised fashion prior to the budget, and we agree with the Treasury that this could have caused confusion in the market as to whether the information was accurate,” the MPs said.

“Given the potential opportunity for disruption that this unauthorised leak could have caused, the government should investigate how this policy came to be leaked prior to the budget and should publicise its findings.”

Tom Scholar, the permanent secretary to the Treasury, wrote to the committee saying he did not believe the wage hike announcement for workers aged over 25 constituted market-sensitive information because it was an “economy-wide measure”.

However, the committee said it believed the announcement could be seen as market sensitive because it affected certain companies with high numbers of low-paid workers compared with other businesses.

Publishing its report on Sunak’s combined budget and spending review, the MPs said the chancellor’s decisions – including the planned increase in national insurance contributions – would add to inflationary pressure and make it harder to cut taxes before the next election.

Mel Stride, the committee’s chairman, said: “With inflation rising significantly, concerns about pressure on the cost of living are growing. While the prime minister’s ambition to promote high wage growth is worthy, focusing on increasing wages without improving productivity is likely to be inflationary, and risks contributing to a wage price spiral.”

Increases in NI and corporation tax, together with the freezing of income tax personal allowances, will leave taxes as a share of national income at their highest in 70 years, but Stride said the scope for reducing them might be limited.

“The chancellor has stated his ambition to cut taxes before the end of the parliament. In October, there was little room for manoeuvre, but there has been positive news from the public finances since then. While further good news may help him achieve this ambition, significant risks remain, most notably from the impact of inflation.”

The MPs also questioned Sunak’s decision to offer less generous post-Brexit support to the UK’s struggling regions than had been provided by the EU.

Noting the government’s shared prosperity fund would provide 60% of the funding from EU structural investment funds, the report said: “If the new fund is intended to be one of “the centrepieces” of the government’s ambition, it is surprising that the size of the fund is being reduced to such an extent. The government will need to demonstrate how these reduced funds will achieve their defined metrics for levelling up.”

A Treasury spokesperson said:“The budget and spending review set out a plan to create a stronger economy for the British people.

“It balanced delivering on the people’s priorities with keeping the public finances on a sustainable path, ensuring future generations aren’t burdened by even higher debt.”

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