Rachel Reeves will not face an investigation from the Prime Minister’s independent ethics adviser over alleged breaches of the ministerial code ahead of the Budget, GB News understands.

The Chancellor, who raised taxes by an eyewatering £26billion, was reported to Sir Magnus Laurie by Reform UK leader Nigel Farage on November 30.

Mr Farage claimed the Chancellor pushed “a sustained and deliberate narrative” after it was reported the UK was facing a black hole of between £22billion and £40billion.

He cited Ms Reeves’s remarks in the House of Commons in early November and pointed out that the Chancellor had not disclosed the Office for Budget Responsibility’s positive headroom forecast to MPs or the public.

In his 968-word letter, Mr Farage wrote: “First, it has been widely reported that, weeks before the Budget, the Office for Budget Responsibility informed the Chancellor that, on unchanged policy, she was on course to meet her fiscal rules with headroom of at least £4billion, and never less than £1.5billion.

“Secondly, notwithstanding that information, the Chancellor conducted a sustained public and media campaign portraying the public finances as being in a state of collapse in order to prepare political ground for approximately £30billion of tax increases which, on the OBR’s own numbers, were discretionary policy choices rather than unavoidable fiscal necessity.”

In a direct plea to Sir Magnus, Mr Farage added: “I therefore ask you to advise the Prime Minister without delay that this matter meets the threshold for formal investigation under the Code, and that such an investigation should begin immediately.

“Given the gravity of the allegations and the public interest, I further request confirmation within seven days whether you intend to initiate an investigation under paragraph 2.6(b) of the Code or advise the Prime Minister to refer the matter to you.”

However, the decision not to push ahead with the probe comes after the UK’s financial regulator also opted against launching an inquiry.

The Financial Conduct Authority was under pressure to investigate potential market abuse after Shadow Chancellor Sir Mel Stride set out his pitch for a probe.

“We have requested details of this work and that the outcome, including of the inquiry into any leak of market-sensitive or inside information relating to the budget, is shared with us so we can consider as appropriate,” the FCA said.

However, Sir Mel had warned that the Treasury’s “leaks and spin” had led to market speculation being “rife, and the gilt markets volatile”.

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He added: “It seems increasingly clear that the Chancellor has been giving an inaccurate picture of the economic and fiscal context and this appears to be driven by political considerations.”

Ms Reeves had been accused of misleading the public, MPs and her own Cabinet colleagues after it emerged the UK’s public finances were in a surplus ahead of November 26.

The fiasco, which was confounded by the resignation of Richard Hughes from the Office of Budget Responsibility, has resulted in the Chancellor backing a separate inquiry into pre-Budget leaks from the Treasury.

James Murray, Chief Secretary to the Treasury, told the Commons: “The Government puts the utmost weight on Budget security, including prevention of leaks of information.

“A leak inquiry is now underway with the full support of the Chancellor and the whole Treasury team.”

The Chair of the Treasury Select Committee, Dame Meg Hillier MP, added: “Leak inquiries have a habit of not finding someone responsible. But if somebody is found responsible, will they follow the lead set by Richard Hughes [and resign]?”

Despite being accused of misleading MPs and the public, Ms Reeves and Sir Keir have denied breaking Labour’s 2024 manifesto commitment not to hike taxes on working people.

The Prime Minister said: “There was a point at which we did think we would have to breach the manifesto in order to achieve what we wanted to achieve.

“Later on, it became possible to do it without the manifesto breach. And that’s why we came to the decisions that we did.”

The Chancellor added: “Anyone who thinks there was no repair job to be done on the public finances, I just don’t accept that.

“We needed to build more resilience, more headroom into our economy, that’s what I did along with investment in the NHS and cutting bills for families.”

However, Ms Reeves has been facing calls to resign, including from Tory leader Kemi Badenoch.