Inquiry launched into leak of budget details

TOP secret documents revealing tax changes were leaked to a tabloid newspaper just hours before the British budget yesterday, …

TOP secret documents revealing tax changes were leaked to a tabloid newspaper just hours before the British budget yesterday, causing acute embarrassment to the Conservative government.

The office of the Prime Minister, Mr John Major, vowed to "vigorously pursue" an inquiry into the source of the leak, the worst in 50 years. Other newspapers. printed what they said were details of the last budget before an election due in the next six months.

The Daily Mirror, the paper which scored the scoop, held back from publication. But others said the budget included a cut in the basic tax rate to 23 per cent from 24 per cent.

Details reported in rival newspapers, the Sun, and in the London Evening Standard, included a rise in cigarette taxes, an increase in petrol duty of 5 per cent more than the rate of inflation and an increase in taxes on company cars.

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The budget was also forecast to cut corporation tax, which affects millions of firms, and raise the starting rate for inheritance tax, but to cut relief on profit-related pay.

Mr Major's Downing Street office confirmed the bundle of documents handed in by the Mirror group was genuine, but a Treasury spokesman said Mr Kenneth Clarke, the Chancellor, would not change the contents of the budget because of the revelations.

It said it had obtained an injunction from a judge to prevent details of the budget being published before Mr Clarke read his statement.

A spokesman said that in the end the injunction was not used because it was overtaken by an agreement between the newspaper and the Treasury's lawyers not to publish.

However, the Mirror put a different interpretation on events, saying it decided not to print details out of a sense of "public duty". It was confirmed last night that the police had been called in to investigate the matter.

London stocks, following a soaring New York market, hit new highs ahead of the budget. But generally financial markets, while intrigued by the leaks, did not react.

Sterling was unaffected and dealers took a sanguine view of what is more of a political than a financial embarrassment.

Budget details are one of the most closely guarded secrets in British government circles. A previous Chancellor, Mr Hugh Dalton, had to resign in 1947 after leaking tax details to a journalist.

Mr Clarke has been heavily criticised because of his support for European moves towards a single currency, moves bitterly opposed by right wingers in the ruling party who want less and not more European integration.