Labour plan huge tax raid as Britons warned of levy rises to fix ‘broke’ Britain

Rachel Reeves is said to be considering plans to raise capital gains tax in line with income tax to plug a £20 billion funding gap from the Conservatives.

The Labour chancellor will be presented with the proposals before she is expected to deliver a speech to prepare the nation for tax rises.

According to reports, Reeves will declare Britain “broke and broken” ahead of revealing an inherited £20 billion hole in public finances from the Tories.

Environment Secretary Steve Reed said the Tories left a “catastrophic” inheritance and covered up the extent of the issues.

Speaking to GB News he said: “What we’re going to do is break out of this Tory doom loop of a low growth economy, leading to a high tax economy, and those two things go hand in hand.

“Labour’s approach will not be to have recourse to further taxation. Labour’s ruling out any tax rise. Labour’s approach will be to grow the economy, and we’ve already started making the announcements that will grow the economy.

“1.5 million new homes, jobs and investment up and down the country. We need to fix the energy infrastructure up and down the country as we harness the power of wind, wave, solar and nuclear.”

The Chancellor will outline the spending inheritance left by the Conservatives when she presents the results of a Treasury audit to Parliament on Monday.

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The Chancellor is reportedly set to scrap or cut back infrastructure projects. These could include the £500 million Restoring Your Railway Fund and the A27 Arundel bypass, The Sunday Times reported.

The paper also said the Chancellor will confirm the Government will not commit itself to a new £1.7 billion tunnel under the Stonehenge monument on the A303. The project is currently tied up in legal action with the Court of Appeal yet to rule on a bid by campaigners to stop it going ahead.

The Chancellor is also expected to approve above-inflation pay rises for millions of public-sector workers in response to the recommendations of independent pay review bodies.

Teachers and some 1.3 million NHS staff could be in line for a 5.5 per cent pay boost, which could cost about £3.5 billion more than had been budgeted for.

Angela Rayner is also due to unveil an overhaul of planning rules next week as Labour seeks to clear a path to building 1.5 million homes in five years. The Deputy Prime Minister and Housing Secretary wrote in The Observer that “delivering social and affordable houses at scale” is her “number one priority.”

The overhaul, to be announced before MPs leave for summer recess, will include bringing back mandatory housing targets that were scrapped by the previous Government and introducing “golden rules” to ensure development works for local people and protects nature, Rayner said.

She wrote: “We plan to set out in detail more of these early and important changes in an updated national planning policy framework next week.”

She also said Labour knew there was a housing emergency when they came into power, but that “lurking under each stone we lift” is “a frankly scandalous legacy” left by their Conservative predecessors.