Rachel Reeves is set to introduce measures that could impact ordinary workers and residents in the South East, while simultaneously boosting annual benefits spending by £15 billion.
The Chancellor is finalizing a challenging financial package, despite having previously assured the public that there would be no further tax increases.
It is anticipated that Ms. Reeves will announce a reassessment of council tax for Band F, G, and H properties in England, a move that could increase financial pressure on homeowners in areas where property values have surged.
Additionally, homes valued over £2 million, predominantly in London, are likely to face an extra “mansion tax,” as the government aligns with Labour’s push to target wealthier individuals.
This policy change comes even after former Labour frontbencher Jon Ashworth had pledged before the election not to alter council tax banding.
Property expert Kirstie Allsopp has cautioned that this “performative” strategy might lead homeowners to undervalue their properties to just below £2 million to avoid higher taxes, at a time when the housing market is already struggling.
Meanwhile, Treasury sources have been all-but confirming that the hated freeze on tax thresholds will be kept in place for another two years.
That ‘stealth raid’ will raise billions of pounds by dragging millions of people deeper into the tax system.
Experts said that continuing the freeze amounted to Labour reneging on past promises not to increase taxes on working people.
Rachel Reeves is set to batter ordinary workers and the South East at the Budget – as she pumps up benefits by £15billion a year
Council tax bands are based on the 1991 values of properties – but changes in prices have varied wildly in different parts of the country since then
For the first time, the state pension would be above the tax threshold – so the government will give with one hand and take with the other.
Ms Reeves is also targeting the ‘salary-sacrifice’ schemes used by millions of private-sector workers for their pensions, bringing in around £3billion.
The move echoes Gordon Brown’s infamous pensions raid during the last Labour government. Experts warned it would deal a hammer blow to private-sector pensions, which already lag far behind the gold-plated arrangements for those in the public sector.
Ms Reeves is struggling to fill a black hole in the books thought to run into tens of billions of pounds.
She has blamed everything from OBR watchdog productivity downgrades to Brexit and Donald Trump for her woes.
But businesses have accused Labour of crushing growth with the last brutal Budget raid – the biggest tax-raiser on record.
And critics point out that Ms Reeves is also splurging huge sums on handouts.
She is expected to scrap the two-child benefit cap at a cost of around £3billion a year, and uprate handouts by nearly 4 per cent from April.
The IFS think-tank has previously suggested a council tax revaluation would hit London and the South East hardest
Ms Reeves has already abandoned hope of curbing the spiralling benefits bill after a Labour revolt earlier this year. She must also fund the cost of another climbdown on winter fuel allowance cuts.
Together those policies are estimated to add around £15billion a year to the benefits bill.
Just a year ago Ms Reeves told the CBI conference that she would not be increasing taxes again after that.
Properties in England are currently put into bands based on their values from 1991, after successive governments shied away from revaluations.
But the surge in prices in London and the South East means that under a new system many could move upwards dramatically.
Labour could argue that because the typical Band D property is not affected they are protecting ‘working people’.
However, huge numbers of people who have stretched themselves for modest properties in the South East, as well as pensioners on fixed incomes, could be in for a shock.
Some 2.4million properties were in Band F, G and H as of this year.
Touring broadcast studios this morning, Business Secretary Peter Kyle apologised for the rumours swirling around the contents of the Budget.
Alarm has been raised that the chaotic run-up – including an extraordinary U-turn on whether income tax will rise – has smashed confidence and slowed the economy.
He told Times Radio: ‘I’m not apologising on behalf of the people who are reporting on the speculation, because that would be absurd.
‘What I can apologise for is the fact that there has been so much speculation. I understand that it’s a distraction, but it is speculation and the reporting of such.
‘I’m here to talk about the facts of the economy right now. And the facts are that we are delivering schemes that are lowering the cost of energy for business in this country, we are delivering an industrial strategy, delivering stability in policymaking for 10 years into the future.
‘We have got a grip on the interest rates and the inflation challenges.’
Business Secretary Peter Kyle said he would not ‘duck’ the impact of the higher tax burden and decision to abolish non-dom status
He later told the CBI conference that the Uk was suffering from a ‘growth emergency’, adding: ‘We will be in it for as long as we are unable to get our way out of this situation without increased economic productivity.’
