Chancellor Rachel Reeves will launch a fresh crackdown on benefit fraud alongside scrapping the two-child limit for universal credit at a cost of £3bn, as ministers seek to head off criticism over rising welfare spending in the budget.
The Conservatives and Reform UK immediately sought to portray the chancellor as presiding over a rising welfare bill at the same time as bringing in billions of pounds in tax rises for working people. Liberal Democrat leader Ed Davey warned that freezing tax thresholds would affect 9 million earners by 2030, dragging them into higher tax bands.
At the same time, Reeves faces pressure from the left, with the Green party leader and the Unite general secretary pressing for a more substantial wealth tax. In response, Reeves plans to bring in an extra £1.2bn in savings by identifying incorrect universal credit payments up to 2031. A Treasury source said every pound of taxpayers' money should be spent with care.
Other budget measures include freezing income tax thresholds for an extra two years to 2030, making salary sacrifice schemes less generous, introducing a pay-per-mile scheme for electric cars, and levying a surcharge on homes worth over £2m. Reeves also froze rail fares and prescription fees and moved to take some levies off electricity bills.
Whitehall sources said the chancellor is unlikely to attempt further big savings on welfare in the budget, after scaling back cuts to disability benefits earlier this year. Reeves has explored cuts to the Motability scheme but faces warnings from disability groups. Welfare reform is expected to follow reviews by Labour ministers Stephen Timms and Alan Milburn, due next year.
Reeves signalled her commitment to welfare reform in a newspaper article, and the Treasury confirmed the budget would increase state pensions by more than £550 a year due to the triple lock. The budget aims to fill a £20bn fiscal hole and focus on the cost of living and inflation.
