Chancellor Rachel Reeves is grappling with weak economic growth, persistent inflation and an expected downgrade to official productivity forecasts.
Chancellor Rachel Reeves has pledged to “grip the cost of living” in her Budget next week.
In an example of one move aiming to ease the pressure on people’s finances, rail fares are to be frozen for the first time in 30 years, saving commuters on more expensive routes more than £300 a year.
But at the same time Ms Reeves is widely expected to raise taxes on November 26 in an effort to bridge a multibillion-pound gap in her spending plans.
Writing in The Mirror, the Chancellor acknowledged that high prices “hit ordinary families most” and that the economy “feels stuck” for too many.
“That’s why in my Budget on Wednesday I will take action to grip the cost of living,” she said.
Ms Reeves is grappling with weak economic growth, persistent inflation and an expected downgrade to official productivity forecasts as she prepares her statement.
Sir Keir Starmer declined to pre-empt the Chancellor when asked by reporters at the G20 in South Africa whether he could guarantee future Labour budgets would not contain tax hikes.
The Prime Minister said: “Obviously I do want the Budget to focus on growth, stability, which is the two pillars that are really important.”
An extension of the freeze on income tax thresholds is among rumoured measures and would see more people dragged into paying tax for the first time or shifted into a higher rate as their wages go up.
Tory leader Kemi Badenoch said the Chancellor should “have the balls” to admit that such a move would breach Labour’s manifesto promise not to raise taxes on working people.
Keeping national insurance and income tax thresholds frozen for two further years until April 2030 would raise around £8.3 billion a year by 2029–30, according to the Institute for Fiscal Studies.
Ms Reeves is also expected to scrap the two-child benefit cap, in a move that could cost more than £3 billion.
She is set to add £1.3 billion to a grant cutting upfront costs for buyers of electric cars, but is also expected to hit them with a pay-per-mile scheme.
And some £48 million for 350 new planners to boost Government efforts to build 1.5 million new homes is reportedly to come.
Other measures expected include £5 million for secondary schools to buy more books for their libraries, an £18 million scheme to revamp playgrounds in England, and a crackdown on shops selling illegal vapes.
