Reeves under pressure to back wealth taxes over cuts

Chancellor faces cabinet revolt on major spending review

- DAVID MADDOX

Rachel Reeves is facing a cabinet revolt over her spending review amid fears departmental cuts will lead to key manifesto spending promises being ditched.

In what is being described as a “proxy war”, the chancellor is facing a push to consider taxes on the wealthy instead of cuts before she outlines her government spending plans next week.

Room for manoeuvre is further restricted by an expectation that the government will U-turn on cancelling winter fuel payments for millions of pensioners, as well as ending the two-child benefit cap, which could cost Ms Reeves as much as £5bn.

The row follows reports that major departments, including Yvette Cooper’s Home Office and Angela Rayner’s Ministry of Housing, Communities and Local Government, have still not settled on an agreement for the spending review due to be unveiled on Wednesday 11 June.

The mounting pressure on the chancellor comes as former Treasury adviser Jim O’Neill told Ms Reeves that she needs to borrow more for major projects to kickstart growth, as the latest forecasts have seen another downgrade for the UK economy, leaving the chancellor with less wiggle room.

And there are fears that a further squeeze on public finances will open the door for Nigel Farage’s populist Reform party to seize power.