Rachel Reeves acknowledged that frustration is boiling over in the UK as workers prepare to face the tough measures expected in today’s Budget following a period of upheaval.
At 12:30 p.m., the Chancellor is poised to announce significant tax increases in a bid to address a substantial financial deficit.
One of the most impactful revenue-generating measures could be the extension of the ongoing freeze on tax thresholds for an additional two years.
This subtle approach to increasing taxes is likely to extract thousands more from households already under pressure, with officials admitting it may undermine Labour’s commitments to safeguard ‘working people’.
The anticipated financial package also includes potential changes to pension tax reliefs and the introduction of a ‘mansion tax’, signifying a tough stance on high earners.
In an effort to ease tensions among Labour MPs, Ms. Reeves plans to introduce financial aid, including the removal of the two-child benefit cap, which could provide approximately 18,000 large families with an additional £14,000 each.
In a sop to hard-pressed households, fuel duty is likely to be frozen for a year and green levies on energy bills could be paid for from government funds.
The dramatic session in the Commons this lunchtime will be a make-or-break moment for both Ms Reeves and Keir Starmer.
Rachel Reeves admitted Britain is ‘angry’ today as ordinary workers brace for Budget pain after weeks of chaos
The Chancellor is gearing up to impose another scorching round of tax hikes in her big set-piece at 12.30pm as she desperately tries to fill a black hole in the finances
Ms Reeves has already blamed a bewildering array of factors from Brexit and Tory austerity to Donald Trump for her woes
There are warnings that markets will hammer the Pound and drive up the cost of servicing the UK’s massive debt mountain unless the Chancellor shows she has a ‘credible’ plan.
But she is thought to be relying on a patchwork of smaller measures to fill a funding shortfall estimated at up to £30billion, after making an extraordinary U-turn on increasing income tax.
She already has the grim distinction of having delivered the biggest tax-raising Budget on record – around £41billion. Ms Reeves looks on track to increase taxes by more in just 16 months than Gordon Brown managed during a decade in No11.
The humiliating ditching of wider reforms to welfare and the reversal of winter fuel allowance cuts have contributed to a grim situation for Ms Reeves.
She has already blamed a bewildering array of factors from Brexit and Tory austerity to Donald Trump for her woes. The OBR watchdog is thought to have downgraded productivity forecasts after concluding they were overoptimistic.
But businesses have pointed to the huge Budget national insurance raid for crushing growth, and lashed out at the ‘fandango’ of weeks of confused briefing about the contents of the Budget.
In a video released ahead of the Budget, the Chancellor tried to put a brave face on the country’s plight.
She said things were improving with ‘wages rising faster than inflation, hospital waiting lists coming down, and our economy growing faster and stronger than people expected’.
‘But I know there is more to do,’ she said. ‘I know that the cost of living is still bearing down on family finances, I know that people feel frustrated at the pace of change, or angry at the unfairness in our economy.
‘I have to be honest that the damage done from austerity, a chaotic Brexit and the pandemic were worse than we thought.
‘But I’m not going to duck those challenges, and nor will I accept that our past must define our future. It doesn’t have to.’
She described the Budget as being for ‘the British people’ and said the Government would work with them to ‘build a fairer, stronger and more secure Britain’.
The Chancellor insisted she will use her Budget to introduce measures to tackle the cost-of-living crisis, as the beleaguered Government hopes to keep backbench Labour MPs on side.
Ms Reeves has vowed to reduce the costs of Government debt and is expected to take steps to increase the buffer she has against future economic shocks to avoid having to keep coming back for more tax in future budgets.
‘Today I will take the fair and necessary choices to deliver on our promise of change,’ Ms Reeves said ahead of the Budget.
She added: ‘I will not return Britain back to austerity, nor will I lose control of public spending with reckless borrowing.
And I will push ahead with the biggest drive for growth in a generation.’
The benefit cap limits means-tested benefits such as universal credit and child tax credit payments to the first two children, costing affected families a typical £3,455 in lost benefits for each additional child.
Figures produced by the Department for Work and Pensions (DWP) show that 470,000 families are now affected by the policy.
About 59 per cent have at least one adult in work, leaving almost 200,000 in which no-one has a job.
Almost two-thirds (297,000) have three children, while a quarter (117,000) have four. A further 37,000 affected families have five children, while 18,260 are listed as having ‘six or more’.
