Reeves vows to make ‘fair and necessary choices’ as Budget day dawns

The Chancellor will aim to grasp the cost of living, and fiscal credibility in her second Budget.

Rachel Reeves has vowed to make “fair and necessary choices” in the Budget, despite being widely expected to introduce a series of tax rises.

The Chancellor insisted she will use her second Budget on Wednesday to introduce measures to tackle the cost-of-living crisis, as the beleaguered Government hopes to keep backbench Labour MPs on side.

But Ms Reeves has also vowed to reduce the costs of Government debt, and is expected to take steps to increase the leeway above her borrowing plans, as she attempts to maintain fiscal credibility.

“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 Chancellor is reportedly going to adopt what is being called a “smorgasbord” approach to raising taxes at the Budget.

Earlier this month, she dropped plans to hike the headline rate of income tax, something which would have broken a Labour manifesto pledge, amid improved economic forecasting.

However, the Chancellor still intends to pursue a strategy of increasing her fiscal headroom, a buffer on her self-imposed borrowing rules.

She has ruled out major spending cuts to achieve this, and so tax rises are set to be the main method of closing the so-called black hole in the public finances.

While income tax rates are no longer set to be raised, a freeze on income tax thresholds is apparently being considered.

This would see more people dragged into paying tax for the first time or shifted into a higher rate as wages increase.

Ms Reeves is also said to be considering limits on how much employees can stash in their pensions under salary sacrifice schemes before it becomes subject to national insurance.

Also among the dozen tax rises reportedly being considered are a so-called “mansion tax” on properties worth more than £2 million, a gambling levy, and pay-per-mile charging for electric vehicles.

Ms Reeves only on Monday told Labour MPs that among her priorities for the Budget was cutting the cost of living.

To that end, she is expected to scrap the two-child benefit cap, a move estimated to cost between £3 billion and £3.5 billion by the end of the Parliament.

Several newspapers also reported Ms Reeves is mulling over a continued freeze in fuel duty, set to cost a further £3 billion, according to the Times.

On Tuesday, she announced she would accept the latest recommendations of the Low Pay Commission to raise the minimum wage, the equivalent of a £900-a-year pay rise for those over the age of 21 in full-time work.

Farmers are set to take to the streets of Westminster on Budget day in a protest about inheritance tax, but have been banned by the Metropolitan Police from bringing their tractors.