Rachel Reeves has admitted it would “take time” for a Labour government to “reverse the damage” the Tories have done to the economy over the past 14 years.
Addressing the Parliamentary Labour Party on Monday evening ahead of the Budget, the shadow chancellor was expected to say that the British people could “see through” Jeremy Hunt’s ploy to adopt Labour’s non-dom tax plan and “max out” the fiscal headroom to fund a pre-election giveaway.
Nothing the Chancellor announces in Wednesday’s “Budget of failure” would change the fact that “working people have been left worse off” by Conservative rule since 2010, according to Ms Reeves.
Mr Hunt is thought to be considering cutting 1p or 2p off income tax or, as a cheaper alternative, national insurance, to ease the burden on working households ahead of the general election this year.
Amid deteriorating forecasts for the public finances, officials have drawn up a range of options for raising money to fund the tax cuts, potentially including reforms to the non-dom tax status that allows wealthy foreign nationals to avoid paying UK tax on their overseas income or capital gains.
The policy is a key plank of Labour’s plans and has previously been resisted by the Government, but the Opposition has said it could raise as much as £2 billion.
Mr Hunt taking on the policy could lay a trap for Sir Keir Starmer’s party, which would have to find an alternative way to pay for measures including NHS improvements.
Ms Reeves said: “The Conservatives have spent the best part of a decade pickpocketing the British people’s taxes, now they are pickpocketing the Labour Party of its policies.
“He is cynically talking up maxing out headroom to pay for pre-election promises. I see through it and so do the British people.”
The test for the Budget “is not whether it satisfies Sunak’s divided party”, but whether it breaks the UK “out of this high tax, low growth doom loop,” she said.
Predicting a “Budget of failure”, the shadow chancellor said Rishi Sunak’s party had “left Britain with the worst economic inheritance since the Second World War”.
“Taxes are a 70-year high, the national debt is the highest in a generation and the economy is now smaller than when Rishi Sunak came to power.
“When people ask themselves if they are better off than they were 14 years ago the rounding answer is: no. At the tail end of this divided, discredited and failed government, working people have been left worse off.
“Nothing Jeremy Hunt says on Wednesday can change that.”
The shadow chancellor was to tell the meeting of Labour MPs their job was to “expose the Conservatives for what they are: desperate, out of touch and out of ideas”.
“Putting party first, not the country. And turning a blind eye to the reckless voices who want to re-run the Liz Truss experiment that crashed the economy.
“We must offer the British people hope of a better future.
“There are no quick wins or easy answers. We will have to take tough decisions in government. We will not be able to do everything we want to do.
“Nor we will be able to reverse the damage they have done right away. It will take time.
“But we can begin the job of giving Britain its future back. Bringing stability back to our economy so we can protect family finances. Investing with business in the jobs and industries of the future. And delivering reform so we can build the next generation of homes and infrastructure.”
Ms Reeves has been reluctant to indicate whether Labour would back any tax reductions announced by Mr Hunt, preferring to wait until the Office for Budget Responsibility releases its judgement on the impact of the changes after Wednesday’s fiscal event.