Rachel Reeves acknowledged people are “angry at unfairness” in the British economy ahead of unveiling her second Budget on Wednesday.
In a filmed address ahead of the Budget, the Chancellor said the Government had started to see results in the past year 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.
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“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 amid an expected series of tax rises.
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.
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“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.
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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 £2m, 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 £3bn and £3.5bn 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 £3bn, 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.