The chancellor is vowing to “take the fair and necessary choices” in today’s budget, as she seeks to grow the economy while keeping the public finances under control.

Rachel Reeves said she will not take Britain “back to austerity” – and promised to “take action to help families with the cost of living”.

She said she will “push ahead with the biggest drive for growth in a generation”, promising investment in infrastructure, housing, security, defence, education and skills.

But following a downgrade in the productivity growth forecast – combined with the U-turns on the winter fuel allowance and benefits cuts as well as “heightened global uncertainty” – the chancellor is expected to announce a series of tax rises as she tries to plug an estimated £30bn black hole in the public finances.

Conservative shadow chancellor Sir Mel Stride has said Ms Reeves is “trying to pull the wool over your eyes”, having promised last year she would not need to raise taxes again. Liberal Democrat deputy leader Daisy Cooper has accused her and the prime minister of “yet more betrayals”.

‘Smorgasbord’ of tax rises

A headline tax-raising measure tomorrow is expected to be an extension of the freeze on income tax thresholds for another two years beyond 2028, which should raise about £8bn.

This move will be seized upon by opposition parties, given that the chancellor said at last year’s budget that extending the freeze, first brought in by the Tories in April 2021 to raise revenue amid vast spending during the pandemic, “would hurt working people” and “take more money out of their payslips”.

What is being described as a “smorgasbord” of tax rises is also expected to be announced, having backed away from a manifesto-breaching income tax rise.

Some of the measures already confirmed by the government include:

• Allowing local authorities to impose a levy on tourists staying in their areas

• Expanding the sugar tax levy to packaged milkshakes and lattes

• Imposing extra taxes on higher-value properties

It is being reported that the chancellor will also put a cap on the tax-free allowance for salary sacrifice schemes, raise taxes on gambling firms, and bring in a pay-per-mile scheme for electric vehicles.

What could her key spending announcements be?

As well as filling the black hole in the public finances, these measures could allow the chancellor to spend money on a key demand of Labour MPs – partially or fully lifting the two-child benefits cap, which they say will have an immediate impact on reducing child poverty.

Benefits more broadly will be uprated in line with inflation, at a cost of £6bn, The Times reports.

In an attempt to help households with the cost of the living, the paper also reports that the chancellor will seek to cut energy bills by removing some green levies, which could see funding for some energy efficiency measures reduced.

Other measures The Times says she will announce include retaining the 5p cut in fuel duty, and extending the Electric Car Grant by an extra year, which gives consumers a £3,750 discount at purchase.

The government has already confirmed a number of key announcements, including:

• An above-inflation £550 a year increase in the state pension for 13 million eligible pensioners

• A freeze in prescription prices and rail fares

• £5m to refresh libraries in secondary schools

Extra funding for the NHS will also be announced in a bid to slash waiting lists, including the expansion of the “Neighbourhood Health Service” across the country to bring together GP, nursing, dentistry and pharmacy services – as well as £300m of investment into upgrading technology in the health service.

And although the cost of this is borne by businesses, the chancellor will confirm a 4.1% rise to the national living wage – taking it to £12.71 an hour for eligible workers aged 21 and over.

For a full-time worker over the age of 21, that means a pay increase of £900 a year.

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Britons facing ‘cost of living permacrisis’

However, the Tories have hit out at the chancellor for the impending tax rises, with shadow chancellor Sir Mel Stride saying in a statement: “Having already raised taxes by £40bn, Reeves said she had wiped the slate clean, she wouldn’t be coming back for more and it was now on her. A year later and she is set to break that promise.”

He described her choices as “political weakness” = choosing “higher welfare and higher taxes”, and “hardworking families are being handed the bill”.

The Liberal Democrat deputy leader Daisy Cooper is also not impressed, and warned last night: “The economy is at a standstill. Despite years of promises from the Conservatives and now Labour to kickstart growth and clamp down on crushing household bills, the British people are facing a cost-of-living permacrisis and yet more betrayals from those in charge.”

She called on the government to negotiate a new customs union with the EU, which she argues would “grow our economy and bring in tens of billions for the Exchequer”.

Green Party leader Zack Polanski has demanded “bold policies and bold choices that make a real difference to ordinary people”.

Mayors will be able to introduce tourist taxes across England, the government has announced.

A day before the budget, communities secretary Steve Reed said mayors will be given the power to impose a “modest” charge on visitors staying overnight in hotels, bed and breakfasts, guest houses and holiday lets.

Politics latest: Milkshakes and lattes to be taxed in the budget

The money raised is intended to be invested in local transport, infrastructure and the visitor economy to potentially attract more tourists.

Regional Labour leaders such as London Mayor Sir Sadiq Khan and Greater Manchester’s Andy Burnham have been calling for the measure.

However, the hospitality industry condemned the move as “damaging”.

The visitor levy will bring England in line with Scotland and Wales, which are already introducing tourist taxes.

Officials said it would bring English cities into line with other tourist destinations around the world, including New York, Paris and Milan, which already charge a tourist tax.

They said research showed “reasonable” fees had a “minimal” impact on visitor numbers.

Sir Sadiq said it is “great news for London” and said the tax will “directly support London’s economy and help cement our reputation as a global tourism and business destination”.

The Greater London Authority previously estimated a £1 a day levy could raise £91m, and a 5% levy could raise £240m.

Mr Burnham said the tax will allow Greater Manchester to “invest in the infrastructure these visitors need, like keeping our streets clean and enhancing our public transport system through later running buses and trams, making sure every experience is a positive and memorable one”.

Read more:
What tax rises could Rachel Reeves announce?
Reeves issues ‘pick ‘n’ mix’ warning ahead of looming budget

However, Lord Houchen, the Conservative Tees Valley mayor, said he will not introduce a tourist tax, adding: “Thanks, but no thanks.”

Conservative shadow local government secretary Sir James Cleverly branded it “yet another Labour tax on British holidays, pushing up costs for hard-pressed families, and yet another kick to British hospitality”.

Kate Nicholls, chair of UKHospitality, warned the “damaging holiday tax” could cost the public up to £518 million, adding: “Make no mistake – this cost will be passed directly on to consumers, drive inflation and undermine the government’s aim to reduce the cost of living.”

The plans will be subject to a consultation running until 18 February, which will include considering whether there should be a cap on the amount.

A man has been arrested in connection with the large-scale illegal tipping of waste in Oxfordshire, police have said.

The 39-year-old, from the Guildford area, was arrested on Tuesday following co-operation between the Environment Agency (EA) and the South East Regional Organised Crime Unit.

Last week, the EA declared the 40ft-high mountain of waste near Kidlington a “critical incident”.

Anna Burns, the Environment Agency’s area director for the Thames, said that the “appalling illegal waste dump… has rightly provoked outrage over the potential consequences for the community and environment”.

“We have been working round the clock with the South East Regional Organised Crime Unit to bring the perpetrators to justice and make them pay for this offence,” she added.

“Our investigative efforts have secured an arrest today, which will be the first step in delivering justice for residents and punishing those responsible.”

Phil Davies, head of the Joint Unit for Waste Crime, added that the EA “is working closely with other law enforcement partners to identify and hold those responsible for the horrendous illegal dumping of waste”.

He then said: “A number of active lines of investigation are being pursued by specialist officers.”

Sky News drone footage captured the sheer scale of the rubbish pile, which is thought to weigh hundreds of tonnes and comprise multiple lorry loads of waste.

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The EA said that officers attended the site on 2 July after the first report of waste tipping, and that a cease-and-desist letter was issued to prevent illegal activity.

After continued activity, the agency added that a court order was granted on 23 October. No further tipping has taken place at the site since.