Rachel Reeves will extend the freeze on income tax thresholds, relying on fiscal drag to raise billions. The move is set to push millions into higher bands and pull all state pension recipients into the tax system by 2027–28. A late U-turn on earlier budget plans unsettled markets.

Shabana Mahmood will unveil Denmark‑style asylum reforms to deter unfounded claims and accelerate removals. Plans aim to cut incentives to travel, speed decisions and appeals, and widen returns agreements. Ministers say the shake‑up tackles record caseloads and rising costs.

Cabinet ministers urged the PM to dismiss chief of staff Morgan McSweeney after No 10 briefings allegedly accused Health Secretary Wes Streeting of plotting against him. McSweeney denies involvement. The row has exposed deep Labour infighting, with calls for an inquiry and for the party to restore discipline.

Over four million people now receive universal credit without being required to look for work, about one million more than a year ago. Ministers cite transfers from legacy benefits and rising ill‑health. The surge is pressuring the welfare bill and is expected to spur reforms to boost employment.