Rachel Reeves was torn to pieces over her ‘Budget for benefits street’ today after unleashing another immense tax assault on Britain.
In scenes of high farce at Westminster, an ashen faced Chancellor was left scrambling after her crucial package was leaked before she even had a chance to deliver it to MPs.
And the situation deteriorated swiftly from there for Ms Reeves as the scale of her raid became clear.
She is set to raise an extra £30billion a year by 2030-31 – including an eye-watering £12.7billion from extending the tax threshold freeze for another three years.
Around a quarter of the working population will be paying higher or top rate tax by then, up from just 15 per cent when it was imposed in 2021. The burden is due to reach a new 300-year record high as a proportion of GDP.
When she finally rose to speak, Ms Reeves told the House she was asking everyone to ‘contribute’, despite explicitly pledging just 12 months ago that the freeze would not be prolonged because it hurts ‘working people’.
But Kemi Badenoch shot back that it was a ‘Budget for benefits’, pointing to a huge splurge on handouts. ‘She has chosen to put up tax after tax after tax,’ the Tory leader said, mocking Ms Reeves for complaining she was the victim of sexism and ‘mansplaining’.
The extraordinary leak came just minutes after Ms Reeves brandished her red box outside 11 Downing Street.
Images from the Commons appear to show the moment during PMQs that she was handed a phone by minister Torsten Bell, informing her of the development.
The Chancellor sought to throw the blame entirely on the watchdog saying it was ‘deeply disappointing and a serious error on their part’. One of her Labour predecessors, Hugh Dalton, quit in 1947 after details were published in an evening newspaper before his speech.
One government aide joked ruefully that they should ‘defund the OBR’.
The two-child benefit cap is set to be axed in a bid to placate mutinous Labour MPs, leaving around 18,000 large families in line to pocket an extra £14,000.
The OBR said 560,000 families will receive extra cash, costing around £3billion a year.
Overall welfare spending is forecast to be £16billion higher by 2030-31 than the watchdog thought as recently as March.
In a sop to hard-pressed households, fuel duty has been frozen for five months, although it will then rise in stages.
Other measures laid out in the documents include:
- So-called ‘salary sacrifice’ tax reliefs – such as for pension contributions – will be limited to £2,000 a year to raise £4.7billion.
- Increasing the tax rates on dividends, property and savings income by 2 percentage points, raising £2.1 billion;
- A new mileage-based charge for EVs and hybrids will be introduced from April 2028, raising £1.4billion;
- A tax on gambling will bring in £1.1 billion a year – although horse racing is exempted;
- A ‘mansion tax’ of up to £7,500 a year on properties worth over £2million, to raise £400million;
- The U-turns on benefits curbs and scrapping winter fuel allowance have cost £7billion;
- The annual limit on cash ISAs is being cut from £20,000 to £12,000, but will stay the same for those aged over 65;
- Labour’s plan for compulsory ID cards is expected to cost £1.8billion over the next three years.
Rachel Reeves imposed huge Budget tax hikes today and splashed the cash on handouts to placate increasingly mutinous Labour MPs
Images from the Commons appear to show the moment she was handed a phone by minister Torsten Bell, informing her of the development.
