The Debate: Is pre-Budget speculation helpful?
We want to write it, you want to read it, but is pre-Budget speculation actually helpful? We put two experts head to head in this week’s Debate
YES: Pre-Budget speculation provides an opportunity to avoid damaging mistakes
It sometimes feels like Budget speculation is a bit like Nazi-cum-American rocket scientist Wernher von Braun’s famous catchphrase: “Once the rocket goes up, I don’t care where it comes down. That’s not my department.”
Indeed, many of the rockets flying out of Treasury’s ornate Whitehall home in recent weeks have failed to reach their intended targets. In fact, they’ve hardly managed to lift off the ground, instead spectacularly blowing up in the government’s face.
But in a sense, that’s the entire point – pre-Budget rocket firing is a politico-economic testing exercise. It’s difficult to know precisely how ideas will land until they are put out for public debate. How much will media commentators complain? What will be the bond market reaction? Which vested interests are going to screech the loudest?
The pre-Budget speculation provides an opportunity, particularly for an out-of-touch and inept government, to avoid bigger and more damaging mistakes.
Just take income tax. This month’s City PM / Freshwater Strategy Poll found that two-thirds of the public would back Rachel Reeves resigning if she broke the manifesto commitment not to increase income tax. It’s no coincidence that, with such intense public feeling against the policy, there was a rapid turnaround on the policy. The alternative could have been a public and parliamentary revolt culminating in the end of Starmer’s premiership and even more business and household instability.
And so, as Budget day approaches, we’re left with the exciting and necessary exercise of shooting down ideas with the precision and targeting only matched by Israel’s Iron Dome defence system.
Plus, if nothing else, it does let the public indulge in one of the country’s few remaining unifying pastimes: taking the mickey out of the Chancellor before she inevitably disappoints us all over again.
Matthew Lesh is a public policy fellow at the Institute of Economic Affairs and country manager at Freshwater Strategy
NO: Speculation at best creates uncertainty, at worse spurs costly pre-emptive action
A major problem with UK tax policy-making is the secrecy surrounding Budgets. Chancellors love to command the news agenda by theatrically unveiling measures with little or no advance notice – unlike what happens in other policy areas. There should be a place for pitch-rolling tax changes – building the case publicly for reform of specific areas so the public understands why change is needed and potentially controversial reforms can be landed. But that is not the sort of public debate we have had before this and so many other Budgets.
Instead, there have been news stories on a plethora of disparate tax proposals, with little explanation of why any option is being considered beyond the need to raise revenue. It is often unclear where these stories come from and whether they reflect official thinking. This does little to clear the way for difficult choices.
In the case of this Budget, the public may well have got one message that the Treasury was trying to send: the economic outlook has worsened and tough choices on tax increases or spending cuts are needed to keep down borrowing and debt.
But if the Chancellor thinks she has prepared the public to accept specific tax changes, she is mistaken.
Months of speculation around a diverse array of policies at best creates uncertainty, causing decisions to be delayed; at worst it spurs pre-emptive action, sometimes costly, sometimes nugatory.
Much of this could be avoided if the government had a clear strategy on tax. Unfortunately, this government, like its predecessors, does not; so, it appears that (almost) anything could be on the table.
THE VERDICT
Once upon a time, leaking Budget policies was a serious offence, career-ending even for Labour Chancellor Hugh Dalton, who was forced to resign in 1947 after letting details slip to a reporter on his way into the chamber to deliver his actual speech. In 2025, things have changed – but have they been for the better?
On one count – spectacle – it’s a definite no. Every good showman knows the importance of anticipation: the slow build that pulls the audience to the edge of their seat before the big… VOILA! But parliament, despite often resembling so, is not actually a playhouse.
As both Mr Lesh and Ms Tetlow argue, there is clear value in being able to pre-pitch ideas to ascertain public response and, in the case of income tax this year, perhaps even directly respond to enlightening newspaper research. But, as Tim Sarson wrote in City PM this week, the volume of pre-Budget speculation has become so loud to now border on unhelpful, mixing in fan fiction with actual fiscal policy.
It’s a fine line between being a statesman and a showman. City PM says cut the spoilers, and bring back the art of the show.