Chancellor Rachel Reeves has told the BBC that she hopes Labour’s first Budget since taking power, which includes massive tax increases, would be a one-off.

“This is not the sort of Budget we would want to repeat,” she told the BBC’s political editor Chris Mason.

“But this is the Budget that is needed to wipe the slate clean and to put our public finances on a firm trajectory.”

Employers will bear the brunt of the £40bn in tax rises unveiled earlier by Reeves – the biggest increase in a generation.

She insists it is needed to plug a £22bn “black hole” in the nation’s finances she inherited from the Conservatives and to invest in the NHS and other public services.

In a marathon 76 minute speech, she said Labour would fulfil its promise to voters in July’s election to “invest, invest, invest” to “drive economic growth”.

But the government’s promise to make the UK the fastest growing economy in the developed world have been undermined by its own financial watchdog.

The Office for Budget Responsibility said the package of economic measures unveiled by Reeves would ultimately “leave GDP largely unchanged in five years”.

Asked about the underwhelming forecasts, she said: “I absolutely accept this is not summit of my ambitions. I want the economy to grow faster than this.”

She added that the “growth numbers this year and next year are being revised up and that’s good news”.

The OBR says the economy will grow by 2% in 2025, up 0.1% in its previous forecast, but it will drift down in subsequent years to 1.5% in 2028.

In her Budget speech, Reeves said “working people” would not see an increase in income tax, National Insurance or VAT, fulfilling a promise made by Labour at the general election.

Instead, employers will see an increase in National Insurance contributions on their workers’ earnings which will raise up to £25bn a year for the government.

There will also be an increase to capital gains tax on share sales and a freeze on inheritance tax thresholds.

In his response to the Budget, Conservative leader Rishi Sunak accused Reeves of “hobbling” economic growth.

“They’re taxing your job, they’re taxing your business, they’re taxing your savings. You name it, they’ll tax it,” Sunak told MPs in his final Commons appearance as leader of the opposition.

But Reeves claimed any “responsible chancellor” would have been forced to do the same to “fix the foundations” of the economy.

Her Budget – the first Labour economic statement since 2010 – sees the second biggest increase in taxes in UK history.

As measured by amount of tax raised relative to the size of the economy, it is slightly smaller than Conservative Chancellor Norman Lamont’s 1993 Budget.

In a surprise move, Reeves decided not to continue a freeze on income tax thresholds beyond 2028, which would have dragged millions of people into the tax system for the first time or pushed them into paying higher rates.

And she announced changes to Labour’s self-imposed borrowing rules to allow the government to pump billions into the UK’s infrastructure and fund improvements to crumbling schools and hospitals.

She also froze petrol duty for next year – and retained a 5p cut introduced by the Tories that was due to expire in April.

Other measures included:

• Capital gains tax paid on profits from selling shares to increase from up to 20% to up to 24%
• Freeze on inheritance tax thresholds extended beyond 2028 to 2030
• VAT on private school fees from January 2025
• Air Passenger Duty on flights by private jet to go up by 50%
• New tax of £2.20 per 10ml of vaping liquid introduced from October 2026
• Tax on tobacco to increase by 2% above inflation, and 10% above inflation for hand-rolling tobacco
• Tax on non-draught alcoholic drinks to increase by the higher RPI measure of inflation, but tax on draught drinks cut by 1.7%
• The stamp duty land tax surcharge for second homes will increase by two percentage points to 5% from Thursday

In what was the first Budget speech by a female chancellor in the UK’s history, Reeves told MPs: “This is a moment of fundamental choice for Britain.

“I have made my choices. The responsible choices. To restore stability to our country. To protect working people.

“More teachers in our schools. More appointments in our NHS. More homes being built.

“Fixing the foundations of our economy. Investing in our future. Delivering change. Rebuilding Britain.”

But leading business groups said the Budget was a “tough” one for business, pointing to the NI hike as a blow to the ability of firms to invest.

“At first blush, there is precious little in the government’s first Budget which offers anything other than short-term pain,” said Roger Barker, director of policy at the Institute of Directors.

The Liberal Democrats welcomed the extra money for the NHS “to start repairing all the damage done to local health services by the Conservatives”.

But leader Sir Ed Davey said: “Raising employer’s National Insurance is a tax on jobs and high streets, and it will make the health and care crisis worse by hitting thousands of small care providers.”

Scotland will receive an additional £3.4bn in Treasury funding as a result of the Budget.

First Minister John Swinney has been calling for the UK government to “immediately and significantly” increase funding for Scotland.

The SNP government has already cut £500m from its budget this year, with ministers warning that without extra cash they would need to make difficult choices when they set out their tax and spending plans for next year in December.

The rate of stamp duty paid by people buying a second home is to rise, Chancellor Rachel Reeves has announced in the Budget.

Stamp duty is a tax paid when buying property over a certain price in England and Northern Ireland.

People buying an additional property are already subject to a higher rate, and from Thursday this will rise from from an extra 3% to 5%.

Reeves said the move would “support over 130,000 additional transactions from people buying their first home, or moving home, over the next five years”.

However, analysts say the increase rate could affect landlords’ willingness to buy more properties.

Paul Johnson, director of the Institute for Fiscal Studies think tank, said renters would “pay part of the cost” of the increase in stamp duty for second-home buyers and landlords “as the supply of such properties falls”.

Ben Beadle, chief executive of the National Residential Landlords Association, said: “The chancellor has failed to heed the warnings of the Institute for Fiscal Studies that higher taxes on the rental market lead only to rents going up.

“What tenants needed was a Budget to boost the supply of new, high-quality rental housing. What we got is a recipe for less choice and higher rents.”

But Ben Twomey, chief executive of campaign group Generation Rent, said: “Renters who have been able to save a deposit to buy a home will get a boost from the increased stamp duty surcharge.

“The higher costs for investors will make it easier for first-time buyers to compete in the house sales market.”

Currently, buyers of homes worth less than £250,000 do not pay stamp duty. This was doubled from £125,000 under Liz Truss’s mini-Budget in September 2022.

The threshold is £425,000 for those buying their first property, with the level raised from £300,000 in the mini-Budget.

However, next March the thresholds are due to revert back to the lower levels set before the mini-Budget.

The current rates of stamp duty are:

• £0-£250,000 (£425,000 for first-time buyers) = 0%
• £250,00-£925,000 = 5%
• £925,001-£1.5m = 10%
• £1.5m+ = 12%

From Thursday, people buying a second home will pay an extra 5% on top of this.

Meanwhile, the Budget included a £500m boost in funding for the Affordable Homes Programme, which the government said would deliver up to 5,000 new social and affordable homes.

Reeves also confirmed the government would reduce Right to Buy discounts in a bid to increase the supply of council housing.

The Right to Buy scheme allows tenants renting council-owned homes to buy them at a discounted rate.

The chancellor said councils would also be able to keep 100% of the money raised from sales of housing so this could be reinvested into new supply.

The prime minister has criticised both Conservative leadership candidates for casting doubt on the police and government’s response to the Southport attack that left three young girls dead.

Tory leadership hopeful Robert Jenrick has suggested information on the attack was “concealed”, while his rival Kemi Badenoch argued that the government, police and prosecutors “have questions to answer”.

This follows the revelation 18-year-old Axel Rudakubana, who is accused of murdering the three girls, was charged with two further offences – including one under the Terrorism Act.

Sir Keir warned MPs they “can either support the police in their difficult work” on the Southport case or “undermine” it.

During his weekly Prime Minister’s Questions session, Sir Keir told a packed House of Commons: “It is important police and prosecutors are able to do their difficult job.

“All of us have a choice to make, including those running to be Conservative leader, they can either support the police in their difficult task or they can undermine the police in their difficult task, and I know what side I am on.”

Badenoch was in the Commons to hear the comments.

Sir Keir was responding to a question from Reform UK’s deputy leader Richard Tice, who called for the police to be more open about investigations.

Reform UK leader Nigel Farage faced criticism after the Southport killings for questioning the police’s assessment of the attacks.

Following the revelations about the extra charges against Mr Rudakubana, Farage released a video claiming “perhaps I was right all along”.

On Wednesday, Mr Rudakubana appeared in court charged with production of the poison ricin and possession of a military study of the Al Qaeda training manual, an offence under terrorism legislation.

Counter Terrorism Police are not currently treating the Southport attack itself as a terrorist incident.

The teenager had already been charged with the murders of Bebe King, six, Elsie Dot Stancombe, seven, and nine-year-old Alice Dasilva Aguiar who died at a Taylor Swift-themed dance class on 29 July.

Following reports of the new charges, Jenrick told ITV News he wanted answers on “when the prime minister knew”.

“The state should not be lying to its own citizens,” he said.

Asked if he thought the state had lied, Jenrick said: “We don’t know the reason why this information has been concealed.

“Why has it taken months for the police to set out basic facts about this case that it is reasonable to believe were known within hours or days of this incident occurring?”

In a social media post Badenoch said there were “serious questions to be asked of the police, the [Crown Prosecution Service] and also of Keir Starmer’s response to the whole situation”.

She said: “Parliament is the right place for this to happen.

“While we must abide by the rules of contempt of court and not prejudice this case, it is important that there is appropriate scrutiny.”

The BBC understands senior figures in government first became aware of the possibility of new charges against the suspect in the Southport murders in the past few weeks.

A spokesperson for the prime minister said it was “not correct” to say the government had been involved in withholding facts from the public.

The CPS said it has taken time to bring the charges because this was a “lengthy and complex investigation”.

Ahead of PMQs, House of Commons Speaker Sir Lindsay Hoyle warned MPs of the risk of seriously prejudicing criminal proceedings by commenting on the investigation in the Commons.

While members might be frustrated at not being able to comment he said: “More importantly at the heart of this case are three young girls.

“We all went to see justice for them and others affected by this appalling incident.”

The day after the Southport attack, thousands attended a peaceful vigil in the town, but a separate protest later turned violent outside a mosque.

This sparked a wave of protests across many towns and cities in the following days, leading to violence and rioting, particularly against asylum centre hotels.

More than 1,000 people have been arrested, and hundreds have been charged and sentenced to jail.