Budget 2025 latest: Reeves urges Labour MPs to back make-or-break Budget despite dire growth forecasts

Rachel Reeves has urged Labour MPs to back her forthcoming Budget, as the final day before the major Government financial statement dawns.

The Chancellor is due to deliver her second budget in the House of Commons on Wednesday, in which she is widely expected to pull the lever on tax hikes in order to fill a black hole in the public finances.

Ms Reeves called for unity within the Labour Party as she spoke to restive backbenchers on Monday night, urging them to support her efforts to steer the national economy.

Many Labour MPs are understood to have become increasingly frustrated about the prospect of tax rises on the horizon, amid their party’s opinion poll slump less than two years into a term of government.

At the gathering of the Parliamentary Labour Party, Ms Reeves told MPs that politics is a “team sport”, in an apparent call for unity.

Nigel Farage has responded to allegations he made racist and antisemitic comments to peers during his time as a schoolboy at Dulwich College.

Allegations published in The Guardian claimed the Reform leader had been behind several incidents of deeply offensive behaviour throughout his teenage years.

Speaking to ITV on Monday, Mr Farage said he had never made racist comments in a “hurtful or insulting way” or with “intent”.

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The OBR’s new forecasts on Wednesday are likely to include revised estimates for economic growth in the UK.

Growth in 2025 has slowed as the year has gone on.

The size of the economy grew by 0.7 per cent in January-March, by 0.3 per cent in April-June and by just 0.1 per cent in July-September, according to estimates by the ONS.

In addition, the economy is estimated to have contracted by 0.1 per cent in September, driven by a fall in motor manufacturing due partly to the cyber attack on Jaguar Land Rover.

The OBR’s current forecast for growth across the whole of 2025 – published back in March – is 1.0 per cent, rising to 1.9 per cent in 2026.

The UK has recorded annual growth of less than 1 per cent only five times in the past 30 years: in 2008 and 2009 (zero and -4.6 per cent respectively, during the financial crash); 2011 (0.9 per cent), 2020 (-10.0 per cent, during the pandemic) and 2023 (0.3 per cent).

Sir Keir had been under pressure to intervene over the row between the White House and the BBC after the broadcaster had apologised for the presentation of the US president’s 6 January speech in a Panorama programme and Newsnight report.

But sources now admit that the subject of the BBC was not raised, as Sir Keir instead tried to press the president on his controversial plans for Ukraine.

The Independent’s Whitehall editor Kate Devlin reports:

Business secretary Peter Kyle has said he does not know his council tax band, despite reports his government is planning to hike the levy for those in higher brackets.

He told journalists at the CBI conference in London: “I live in a small one bedroom flat in in Hove, I can’t even tell you what band I’m in”.

Rachel Reeves could hit more than 100,000 high-value properties with a mansion tax in her Budget on Wednesday as she seeks to raise money to fill a black hole in the nation’s finances.

The chancellor has reportedly scaled back plans for a property tax but is now expected to apply a tax to homes worth more than £2 million, in a move which could raise between £400m and £450m for the Treasury.

Some 2.4 million properties in the top three council tax bands – F, G and H – will be revalued to determine which will be subject to the surcharge, which will be worth an average of £4,500, according to The Times.

Labour is set to announce an end to the two-child benefit cap at Wednesday’s Budget, following months of intense pressure from backbenchers, campaign groups and political opponents.

The two-child benefit cap prevents parents from claiming universal credit or tax credit for their third child. It was introduced by the Conservatives and came into place in April 2017. It only applies to children who were born after 6 April 2017.

The measure was announced by then-chancellor George Osborne alongside a raft of other changes to the benefits system. The Conservatives said the measures were designed to encourage benefit recipients “to make the same choices as those supporting themselves solely through work”.

Latest official figures show that 1.6 million children are living in families affected by the policy.

Campaigners, charities and politicians from across the spectrum have called on the government to scrap the measure, saying that 109 children across the UK are pulled into poverty by the policy every day.