Chancellor defends Budget as critics round on tax hikes

Rachel Reeves insists 'everyone must contribute' to success

- DAVID MADDOX KATE DEVLIN

Millions more people will be dragged into paying higher income tax after Rachel Reeves bet her political future on a £26bn tax raid on the middle classes in her make-or-break second Budget.

In what she branded a “Labour values” Budget, the chancellor moved to appease the left in her party with a package of measures that included 43 separate tax rises - according to shadow chancellor Sir Mel Stride - taking the tax burden in the UK to its highest level in history. But she finally brought an end to the much-criticised two-child benefit cap, which campaigners say will help lift thousands of children out of poverty, and announced a £73bn splurge in welfare spending.

The decision to freeze tax thresholds in this Budget from 2028-29 onwards, to help fill a £20bn black hole in public finances, will raise £8bn in 2029-30 and drag one in four workers into the highest tax band. A further 780,000 people will pay tax for the first time.

In a wide-ranging Budget, the chancellor announced a raft of measures, including:

• Pension contributions under salary sacrifice schemes of over £2,000 a year to be hit with national insurance contributions

• Homes worth more than £2m will be slapped with a new “mansion tax”, while landlords will be hit by a 2 per cent tax hike

• The welfare bill was set to rise by £73bn, taking it to above £400bn - up by £9bn - by 2030

• A plan to cut energy bills by £150, as well as freezing rail fares and prescription charges

• And she found cash for a £22bn safety buffer in case of more economic shocks after being hit by Donald Trump’s tariffs this year