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Rachel Reeves will raise taxes in this month's Budget in order to safeguard £53billion of new funding for the NHS , it is claimed. The Chancellor is understood to have decided the increase for the health service must be protected "at all costs". On Sunday Defence Secretary John Healey repeatedly refused to say Labour would stick to its manifesto commitment not to raise income tax or VAT. He admitted there will be "consequences" from recent weaker economic forecasts at this month's Budget . Ms Reeves is said to be considering a rise in the basic rate of income tax - the first since 1975. She is also weighing up higher council tax bands to raise the amount raised from most expensive homes. The Chancellor is reported to have told her allies that her two priorities are "cutting waiting lists and cutting national debt", according to the Sunday Times. She is claimed to be focused on delivering a 2.8% increase in the NHS's annual budget - which she will refuse to reduce. But Ms Reeves was dealt a blow when the Office for Budget Responsibility (OBR) downgraded the UK's productivity levels by 0.3%. This is expected to translate to a £20 billion increase in public sector net borrowing without tax rises. Mr Healey insisted no decisions had been made, adding: "But what we do know is that they now see the deep damage and scarring to be much more serious than previously thought, a combination of years of cuts, Covid and really slow economic growth over 14 years. "So there are consequences. Things do change, and we'll have the announcements that are needed to deal with those challenges in the Budget." He said Labour would be looking to drive stronger economic growth, adding: "Because that's the thing that has hobbled Britain over the last 14 years of the Tory government." The Chancellor already faces a significant gap in her spending plans caused by higher borrowing costs and persistent inflation. On top of this U-turns on winter fuel payments and slashing the benefits bill will impact her choices on November 26. And she is also expected to announce changes to the controversial two child benefit limit following intense pressure from backbench MPs and anti-poverty campaigners. In last year's manifesto, Keir Starmer said he would not increase VAT, national insurance or income tax. But at PMQs last week he swerved a question on whether this still stood. Pressed by Tory leader Kemi Badenoch he said: "The Budget is on the November 26, and we will lay out our plans, but I can tell the House now that we will build a stronger economy, we will cut NHS waiting lists and deliver a better future for our country."
