Rachel Reeves has urged Labour MPs to back her forthcoming Budget, as the final day before the major Government financial statement dawns.
The Chancellor is due to deliver her second budget in the House of Commons on Wednesday, in which she is widely expected to pull the lever on tax hikes in order to fill a black hole in the public finances.
Ms Reeves called for unity within the Labour Party as she spoke to restive backbenchers on Monday night, urging them to support her efforts to steer the national economy.
Many Labour MPs are understood to have become increasingly frustrated about the prospect of tax rises on the horizon, amid their party’s opinion poll slump less than two years into a term of government.
At the gathering of the Parliamentary Labour Party, Ms Reeves told MPs that politics is a “team sport”, in an apparent call for unity.
The Chancellor’s decision to remind MPs of this was “because united parties are the ones who win elections”, according to a Treasury spokesman.
Ms Reeves also described the Budget as a “package” not a “pick ‘n’ mix”, urging MPs to back the whole of it rather than single out parts they dislike for criticism.
Labour backbenchers are likely to be content with 95% of it, she suggested, as she hinted at difficult political decisions yet to be announced.
The Chancellor also told MPs the Budget will focus on three priorities: “Cutting the cost of living, cutting NHS waiting lists and cutting the cost of debt.”
Ms Reeves is said to be facing a more difficult economic outlook in the medium term, with Sky News reporting that the Office for Budget Responsibility has downgraded its growth forecast for 2026 and every other year before the next election due in 2029.
The downgrade, and the subsequent reduction in tax revenues, will force the Chancellor to hike taxes to balance the books and build a bigger buffer against future shocks than the historically-low level of headroom she has previously given herself.
As she is preparing to undertake what has been described as a “smorgasbord” approach to raising tax, Ms Reeves could hit high-value properties with a new levy that applies to those worth more than £2 million and could raise £400-£450 million, according to reports.
But she has already been warned about the impact of the so-called “mansion tax” if it is implemented incorrectly.
Economist Paul Johnson, formerly of the influential Institute for Fiscal Studies think tank, told The I Paper that a full revaluation of council tax was needed, rather than simply raising the highest tax bands.
Scottish Labour leader Anas Sarwar called the Budget “a moment to restore confidence and put this Labour government back on track”.
Writing in The Independent, he said: “Ultimately both voters and businesses will have benefitted from decisions this UK Labour government has made.
“The tragedy is the failure to project confidence and communicate those changes have left them feeling uncertain. But if we do not act to increase business confidence, then we will be stuck in the doom loop of speculation, timidity and short-termism that holds our economy back.”
Shadow housing secretary Sir James Cleverly said the prospect of tax rises looked like Labour MPs “bossing around” the Chancellor and predicted “a whole load of stealth taxes”.
“What we’re seeing from the Labour Party is these weird contortions because Rachel Reeves is trying to ramp up taxes. Her backbenchers are basically bossing her around,” he told Times Radio.
“The promises, so-called promises that she and Keir Starmer made during the election are boxing her in.
“So I suspect what we’re going to see in tomorrow’s Budget is a whole load of stealth taxes, a whole load of ways to try and squeeze more money out of hardworking people, including people who don’t live in mansions, but they just live in family houses that happen now to have increased in value.
“And they will be penalised because of their ineptitude.”
