The Treasury has launched an investigation into a potential leak of market-sensitive information following the publication of bank tax details before the October Budget. The inquiry, led by the Government security group in the Cabinet Office, follows a request for information from the Treasury Committee, a cross-party group of MPs that scrutinizes the government's financial department.
The investigation focuses on an article published by Bloomberg that contained accurate details regarding the bank corporation tax surcharge. The report stated the surcharge would not return to its previous 8% level, a measure that was less severe than the banking sector had anticipated. Dame Meg Hillier (Lab), chairwoman of the Treasury Committee, said this may have been a leak of market-sensitive information that correlated with an increase in bank share values before Chancellor John Healey delivered his fiscal statement.
Treasury permanent secretary James Bowler responded to the committee's concerns by stating he was assured that no banks, representatives, or trade bodies were briefed on the tax changes before the official announcement. Bowler noted that there was a "necessary widening of the circle of knowledge within government" on the day of the Budget to prepare for its delivery. He stated that all individuals involved are subject to strict confidentiality requirements prohibiting disclosure to the media or financial market participants.
Dame Meg Hillier expressed skepticism regarding the inquiry, describing the frequency of such investigations as a "doom-loop of dead-end investigations" that rarely result in findings of wrongdoing. Hillier stated that the Treasury still needs to explain how information likely to affect share prices was circulating in newsrooms before it was presented to Parliament. She indicated that the committee will press the Chancellor on the issue during a future session.
The concrete change for those involved is the subjection of government staff to a formal security probe by the Cabinet Office to determine if confidentiality protocols were breached. If a leak is confirmed, it could lead to changes in how the Treasury manages the "circle of knowledge" during Budget preparation. The public would notice this through potential disciplinary actions if a source is identified, though Hillier suggested past inquiries have resulted primarily in procedural reassurances.
The knock-on effects include a potential strain on the relationship between the Treasury and the Treasury Committee, which is responsible for government oversight. The next step in this process is scheduled for Wednesday afternoon, November 11, when Chancellor John Healey is expected to appear before the Treasury Committee to answer questions regarding the Budget.