Budget purdah has been replaced with news management and spin | Larry Elliott

There was a time when budgets were kept secret until the moment the chancellor of the Exchequer stood up in the Commons to reveal the contents of his red box. For weeks leading up to the big day, the Treasury would go into “purdah” – a news blackout – while officials quietly pieced together their package of measures.

Transgressions of this code were rare, and when they did occur, they had consequences. Hugh Dalton, the Labour chancellor, had to resign in 1947 after revealing some budget titbits to an evening paper journalist on his way into the chamber, wrongly believing it was too late for them to go into print.

These days there is no such thing as budget purdah, merely budget news management and budget spin. Parts of the statement are selectively trailed, sometimes in the form of leaks to government-supporting newspapers, but more usually through press releases, in the days leading up to the statement.

Already this year, the Treasury has let it be known that there will be extra money for infrastructure for the purposes of levelling up, for skills, for the NHS, for families, for border protection, for the arts, and to attract inward investment. The latest announcement was that the national minimum wage will go up from £8.91 to £9.50 an hour from next April.

An above-inflation increase in the NMW sounds like just the sort of rabbit Sunak ought to be pulling out of the hat at the end of his budget speech, particularly since it fits well with the government’s levelling-up agenda. So the suspicion is that he is keeping something even juicier back for Wednesday.

What might that be? Well, almost all the announcements ahead of the budget have been about spending, with a particular emphasis on cash for the seats in the Midlands and the north of England won by the Conservatives in the 2019 election. That makes sense, because it will take time for any investment to have an impact (assuming, of course, that it is big enough to make a difference).

The chancellor has had much less to say about tax cuts for the other half of the Conservative coalition: better-off voters in the south of England. Sunak’s message to them will be that the public finances look a lot healthier than they did in the spring, and so – if things go to plan – taxes will eventually be cut.

Clearly, the hope is that control of the news agenda means that a narrative will have been established by the time thinktanks such as the Institute for Fiscal Studies and the Resolution Foundation get to unpick the budget and highlight some of its less attractive aspects. Dalton would be astounded, if not spinning in his grave.

Rise in Brent crude price poses question for Bank of England

Ouch! The price of a barrel of Brent crude is heading towards $90, and that means the cost of motoring is going up fast. The latest increase in the price of petrol and diesel means it costs a motorist with a 55-litre tank £15 more to fill up than it did a year ago – and there is more to come.

You don’t need to be a genius to work out how the Treasury will respond. Despite the rather unfortunate timing ahead of next week’s Cop26 global climate conference in Glasgow, fuel duties will be frozen or cut in the budget, as has been the case consistently over the past decade. If duties didn’t rise when the price of crude was $15 a barrel, they are certainly not going to rise now.

It’s much less obvious how the Bank of England will react to the news. On the one hand, higher fuel prices push up the annual inflation rate to a level well above the government’s 2% target. On the other, an increase in the cost of living eats into consumer spending power – a point made by Silvana Tenreyro, one of the nine members of Threadneedle Street’s monetary policy committee.

In truth, there is not much the Bank can do to influence the price of oil or to mitigate the supply-chain shocks that have been pushing up the annual inflation rate. Raising interest rates from 0.1% to 0.25% will have zero impact on the cost of a barrel of crude.

Nobody is really sure what the Bank now thinks, but from the muddle and confusion financial markets have gained the impression that an increase in interest rates is highly likely at next week’s MPC meeting. Say what you like about the Treasury’s communications strategy: at least it’s got one.

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