Chancellor Rachel Reeves faces a high-stakes test on Wednesday as she delivers the Autumn Budget - a moment Labour insiders describe as critical for party unity ahead of major elections next May. The November 26 statement comes after months of internal tensions and an abandoned plan to raise income tax.
The Budget must tackle a £50 billion deficit in public finances while keeping fractious Labour MPs united. A No 10 source told The Mirror: "This has to be a unity Budget. The PLP [Parliamentary Labour Party] has to come together."
The pressure intensified after the government reversed course on income tax. Initial signals of a potential hike - which would have made Reeves the first Chancellor since Dennis Healey in 1957 to raise income tax - sparked what insiders called an "extraordinary briefing war" at the top of government. Better-than-expected economic forecasts ultimately killed the plan.
What's in the Budget
Nine benefits including Personal Independence Payment, Disability Living Allowance and Carer's Allowance will rise by 3.8 percent - matching September's inflation rate - from April. Universal Credit will increase above inflation by 6.1 percent, lifting standard allowances from £92 to £98 weekly for singles and £145 to £154 for couples.
The State Pension will climb by £11 weekly to £241 under the triple lock mechanism, bringing the full annual rate to around £11,973. The increase follows 4.8 percent wage growth between May and July.
Reports suggest Reeves will extend the freeze on income tax thresholds from 2028 to 2030. The government froze the £12,570 Personal Allowance in 2021, pushing more workers into taxation as wages rise with inflation.
Reports also suggest Reeves may scrap the Two Child Benefit Cap, introduced by Theresa May's Conservative government in April 2017. The Resolution Foundation warns 4.8 million children could fall into poverty by decade's end without the change.
The unity challenge
Starmer, arriving in Johannesburg for the G20 summit, told reporters: "If you want to deal with the cost of living and make people better off with good secure jobs, investment from G20 partners and allies is really important." In broadcast interviews reported by The Mirror, he referenced having in his mind's eye, people struggling with the cost of living.
A Treasury source told The Mirror Reeves wants to show she is "making the right choices and not the politically expedient ones that will mean a stable economy." The source added: "We fixed the foundations last year and we are seeing progress. But we have faced challenges from global factors, tariffs etc. We know for working families that the economy still feels stuck."
Senior Labour figures believe a strong child poverty offering - particularly ending the two-child benefit limit - could unite MPs after a turbulent year. The party previously reversed welfare cuts and reinstated winter fuel payments following what sources described as "massive rebellions."
With major elections across England, Scotland and Wales in May, and constant speculation over the PM's position, the Budget's reception within Labour ranks could prove decisive for the government's trajectory.
Note: This article was created with Artificial Intelligence (AI).
