Chancellor Rachel Reeves set to tax the rich to fill £30BILLION public finance black hole

Rachel Reeves is set to tax the rich to plug a £30bn black hole in the public finances ahead of the budget.

The Chancellor will not significantly increase borrowing or reduce public spending in this year’s Autumn budget, Treasury sources said.

The only remaining solution to close the £20-30 billion gap is to significantly increase taxes.

Sources close to the chancellor told Telegram: ‘He will be fair in asking them to contribute more to rebuilding our public services.’

He added that he was ready to make ‘tough decisions’ and would target those with higher incomes rather than tax ‘working families’.

‘More debt will endanger our public finances, will put future generations in more debt, and a return to austerity policies will condemn the country to decline,’ they said.

This is the clearest indication yet that he is planning a tax raid on wealthier families.

Despite announcing £40bn worth of tax increases in last year’s Budget, Ms Reeves has repeatedly refused to rule out a new raid this autumn.

It comes as the Chancellor faces growing pressure to scrap the two-child benefit limit and replace it with a ‘tapering system’.

The Chancellor is under pressure from both backbench MPs and ministers to remove the benefits cap in his upcoming Budget.

But Treasury officials are said to be exploring options to replace the limit with a new tiered system due to concerns that costs for overly large families will rise.

The two-child benefit cap currently prevents parents from claiming Universal Credit or child tax credit for a third or additional child born after April 2017.

It is estimated that removing the cap entirely, which is being called for by both MPs and charities, would cost around £3bn a year.

Sir Keir Starmer hinted the Government will soon scrap the two-child benefit limit in his speech to the Labor Party conference.

Asked about reports whether he would do this in the Budget, the Chancellor told an event outside the Labor Party conference: ‘Keir said in his speech today that we will reduce child poverty in this Parliament but we will set the policies in the Budget.

‘I think we’ve made it pretty clear this week that we can’t stick to policies without explaining where the money comes from.’

Adding that there were ‘real financial constraints’ due to persistent inflation, tariffs, global conflicts and increased borrowing costs – along with expected changes to OBR forecasts – she said: ‘I would be the first person to want to find some money down the back of the sofa to pay for lots of different things.

‘But I have to be Chancellor of the world as it is, not as I want it to be.’