The chancellor said higher taxes on the wealthy are needed to repair underfunded public services and sustain investment in schools, hospitals and infrastructure. She rejected calls for austerity after weaker growth forecasts and defended protecting capital spending to boost productivity.

Ministers have dropped the pledge of day-one protection from unfair dismissal, opting for a six-month threshold after negotiations with business and unions. The TUC accepted the compromise as the nine-month probation plan is scrapped, prompting concern over a manifesto breach.

Rachel Reeves unveiled a £26bn revenue plan, with tax rises aimed at wealthier households and a continued freeze on income tax thresholds. She scrapped the two-child benefit cap and promised help with energy bills, saying everyone must contribute while protecting those most in need.

The chancellor will present a budget to ease the cost of living and restore fiscal stability. It promises help for households, investment to lift growth and productivity, and disciplined borrowing to reassure markets, billed as a decisive reset for the government’s economic plan.