Public finances are in a 'challenging state'

THE public finances are in a “challenging state”, a senior Cabinet minister has acknowledged, amid speculation Rachel Reeves could hit the wealthy with tax hikes in the Budget.

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Health secretary Wes Streeting admitted there were issues with the economy and said households were also feeling the squeeze.

But he insisted there were “green shoots” of economic recovery “but we’re not out of the woods yet”.

Reports suggest Ms Reeves is considering a new mansion tax which would hit owners of properties with an annual charge of 1% of the amount by which its value exceeds £2 million, meaning a £10,000-a-year levy for homes worth £3 million.

Other reports suggested she was considering a manifesto-busting 2p hike to income tax.