by Angharad Carrick

Rachel Reeves is likely to go after the wealthy in a bid to balance the books.

Her recent u-turn on winter fuel payments and increased defence spending will need to be paid for.

But the Chancellor has boxed herself in with her iron-clad fiscal rules, giving her little room to manoeuvre.

Most economists and think tanks think tax rises in the Autumn Budget are now inevitable.

Campaigners want to see a wealth tax to pay for increased spending, but given its limited impact, it's unlikely to happen.

Instead, Reeves may indirectly impose taxes on the wealthy, despite their protests that they already pay their fair share.

Read more here:

Labour MP Jeevun Sandher, who sits on the Treasury committee, said the country was experiencing some of the 'most serious and difficult times in almost a century'.

These are the most serious times for any government in this century, we have to rise to the challenge, and part of rising to the challenge in a democracy is being honest with people about where we stand.

We’re making decisions today, yes making people better off in the short run, but also years to come, decades and even generations.

Nearly half a century has passed since Margaret Thatcher skewered the incumbent PM James Callaghan at the 1979 election with her famous 'Labour Isn't Working' poster, which showed dole queues stretching across the horizon.

We are not quite there yet.

But after years of low unemployment in Britain, Rachel Reeves and Sir Keir Starmer have brought chaos – in just 11 months – to what was one of the strongest labour markets in Europe.

Last October's Budget and its central and perhaps most hated policy – an increase in employers' National Insurance to 15 per cent – added no less than £23 billion to bosses' wage bills.

And for all this Government's promise not to raise taxes on 'working people', it's now clear that this misguided and self-defeating pledge is having a vicious impact on jobs.

• Read the full comment piece by Alex Brummer here

Barely one in ten voters believe that Chancellor Rachel Reeves is doing a good job, a poll has revealed.

The YouGov survey, published on the eve of the Chancellor's spending review today, showed widespread disillusionment with her performance since taking office last year.

Just 12 per cent of people said Ms Reeves is doing a good job, while 53 per cent said she is doing a bad job – giving her a net approval rating of minus 41.

Ms Reeves even fared badly among Labour voters, with only 28 per cent voting in favour of her efforts, while 32 per cent condemned them.

Allies of Angela Rayner were last night claiming victory in her bid to secure more cash towards meeting Labour's target of building 1.5 million new homes by the next election.

The Deputy PM, who is responsible for housing policy, had a series of bust-ups with Treasury ministers and No 10 over the issue.

The Treasury had proposed a modest increase in the social housing budget from £2.3 billion a year to £2.5 billion. But government sources last night said Ms Rayner had secured a £39 billion settlement over ten years.

The Treasury said it was the biggest boost to social housing in a generation.

The additional spending has been welcomed by homelessness charities, with Crisis calling it “a determined political signal that housing really matters” and Shelter describing the move as “a watershed moment in tackling the housing emergency”.

The Chancellor is set to extend the £3 cap on bus fares until 2027 when she unveils her spending review today.

As first reported by the Mirror, Rachel Reeves is understood to be preparing to announce an extension to the cap beyond the end of 2025.

Instead, it will continue across England until March 2027 as the Government seeks to ease cost-of-living pressures on the public.

The Government has previously said that, without the cap, fares could rise by as much as £12 for a journey between Leeds and Scarborough, or £5.50 for a ticket between Hull and York.

A Treasury source said:

We understand the cost of living is a priority for the British people. That is why we are investing in Britain’s renewal to make working people better off.

But the Liberal Democrats criticised the decision not to return to the £2 cap that had been in place between January 2023 and December 2024.

The increase in the cap was announced at the budget in October, with the Government arguing the lower rate was not financially sustainable, although some metro mayors decided to fund an extension of the £2 cap in their areas.

Welsh railways are set to receive a £445 million investment when the Chancellor announces her spending plans for the coming years on Wednesday.

Rachel Reeves is expected to announce the additional funding as part of her spending review, aiming to address what the Treasury sees as years of underinvestment in Welsh infrastructure.

Understood to be a combination of direct funding and additional money for the Welsh government, the investment is expected to be spent on projects such as fixing level crossings, building new stations and upgrading railway lines.

A Treasury source said:

With this Government, Wales will thrive, and the Chancellor has prioritised bringing forward a package that has the potential to be truly transformative.

On Tuesday, Welsh First Minister Eluned Morgan told members of the Senedd that her government was 'expecting something positive from the spending review'.

According to reports, the NHS will be in line to receive a £30 billion cash boost

Ahead of the spending review, the Institute for Fiscal Studies has warned that any increase in NHS funding above 2.5% is likely to mean real-terms cuts for other departments or further tax rises to come in the budget this autumn.

The IFS said:

The reason for that is our NHS. It is huge. It accounts for almost four pounds in every ten of the day-to-day public services budget. And it is voracious. You can be absolutely sure that it will get more than 1.2 per cent a year. A lot more.

The Chancellor has already insisted that her fiscal rules remain in place, along with Labour’s manifesto commitment not to increase income tax, national insurance or VAT.

She will say later today:

I have made my choices. In place of chaos, I choose stability. In place of decline, I choose investment. In place of retreat, I choose national renewal. These are my choices. These are this Government’s choices. These are the British people’s choices.

by Jason Groves and John-Paul Ford Rojas

Rachel Reeves has been hit by a jobs slump as she prepares to take a gamble on the nation’s finances with a giant spending spree.

In a blow that makes a mockery of the Chancellor’s claim to have ‘fixed the foundations’ of the economy, official figures showed a quarter of a million jobs have gone since her tax-raising Budget last year.

Experts said it was a ‘painful lesson in basic economics’ for Ms Reeves after she ignored warnings and levied a £25 billion ‘jobs tax’ on National Insurance. The Chancellor will today set out Labour’s spending plans for the rest of the Parliament following a bitter Cabinet battle over how to divide up the proceeds from last year’s Budget.

Last night Ms Reeves admitted that voters do not feel like they have more money in their pockets as Labour prepares to mark one year in office.

Read more here:

Reeves and Keir Starmer preparing for the Budget last year

Rachel Reeves will tell the Commons this afternoon her priorities are 'the priorities of working people'.

The Chancellor is expected to focus on 'Britain’s renewal' as she sets out her spending plans for the coming years, with big increases for the NHS, defence and schools.

Arguing that the Government is 'renewing Britain', she will acknowledge that 'too many people in too many parts of the country are yet to feel it'.

She will say:

This Government’s task – my task – and the purpose of this spending review is to change that, to ensure that renewal is felt in people’s everyday lives, their jobs, their communities.

Among the main announcements is expected to be a £30 billion increase in NHS funding, a rise of around 2.8% in real terms, along with an extra £4.5 billion for schools and a rise in defence spending to 2.5% of GDP.

But Wednesday could present a tough prospect for other government as the Chancellor seeks to balance Labour’s commitments on spending with her fiscal rules.

On Monday, the Government confirmed it had reached settlements with all departments after Yvette Cooper became the last Cabinet minister to fix a deal.

Some ministers will be celebrating the agreements, while others will rue not securing a more generous sum.

Let’s take a look at the potential winners and losing from the spending review:

The winners

According to reports, the NHS will be in line to receive a £30 billion cash boost at the expense of other public services with the Department for Health and Social Care set to be given the largest settlement of the spending review. But despite the incoming windfall, health chiefs have warned Labour's promise to 'turbocharge delivery' could lead to difficult compromises elsewhere.

Day-to-day funding for schools is expected increase by an extra £4.5 billion by 2028-9 compared with the 2025-6 core budget, while free school meals will be expanded to 500,000 children whose parents are receiving Universal Credit, regardless of their income.

The Government has committed to spend 2.5 per cent of gross domestic product on defence from April 2027, with a goal of increasing that to 3 per cent over the next parliament – a timetable which could stretch to 2034.

And the losers...

• Home Office

Home Secretary Yvette Cooper was believed to be the last Cabinet minister to agree a deal with the Treasury amid reports she desperately tried to get more money for the police and borders funding. Police chiefs including Sir Mark Rowley, the commissioner of the Metropolitan Police, had lobbied the government for more money with suggestions the department had a settlement 'imposed' on it by No 11.

Mayor of London Sir Sadiq Khan’s office is concerned that Wednesday’s announcement will include no new funding or projects for London.The mayor had been looking to secure extensions to the Docklands Light Railway and Bakerloo line on the Underground, along with the power to introduce a tourist levy and a substantial increase in funding for the Metropolitan Police.

Some announcements of what will be included in the spending review were made ahead of Reeves' statement in Parliament later.

Reeves will deliver her review at 12:30pm after Prime Minister's Questions.

Here's what we can expect:

• Winter fuel payments

Payments will be made to three quarters of pensioners this year after Reeves confirmed a U-turn on the government's controversial decision to limit the payments to those receiving means-tested benefits. The government said the change will cost around £1.25bn in England and Wales.

• Defence spending

Will rise from 2.3% of gross domestic product (GDP) to 2.5% by 2027 - an increase of around an extra £5bn a year. This will be paid by cutting the overseas aid budget. Ministers want to increase defence spending to 3% by 2034. There are suggestions that the NHS will get an extra £30bn over three years

• Free school meals

Will be expanded to 500,000 children whose parents are receiving Universal Credit, regardless of their income. Across education, day-to-day spending will rise by £4.5bn a year by 2028-29, according to The Observer

• Trains, trams and buses

Investment worth £15.6bn will fund extensions to trams, trains and buses in Greater Manchester, the Midlands and Tyne-and-Wear, after criticism that too much infrastructure spending targeted London and the South East

• Drug treatments

The government will spend £86bn on the science and technology sector by the end of the parliament, including funding research into areas such as drug treatments and longer-lasting batteries

• Sizewell C

Reeves has signed off on £14.2 billion of investment to build the new Sizewell C nuclear plant which the Treasury said would go towards creating 10,000 jobs, including 1,500 apprenticeships. Energy Secretary Ed Miliband said new nuclear power capacity was needed to deliver a 'golden age of clean energy abundance'.

The generous fiscal envelope set at the Budget last Autumn has been put under massive pressure by the economic slowdown, calls for more defence cash, and Labour revolts on benefits.

While the political backdrop to the proposals this week is the continual surge of Reform, with Labour increasingly panicking about the challenge posed by Nigel Farage and co.

Ms Reeves will have some £113billion to distribute that has been freed up by looser borrowing rules on capital investment.

But she has acknowledged that she has been forced to turn down requests for funding for projects she would have wanted to back in a sign of the behind-the-scenes wrangling over her spending review.

Economists have warned the Chancellor faces unavoidably tough choices in allocating funding for the next three years.

She will need to balance manifesto commitments with more recent pledges, such as a hike in defence spending, as well as her strict fiscal rules which include a promise to match day-to-day spending with revenues.

Hello and welcome to MailOnline’s live coverage as Rachel Reeves unveils the government’s spending review.

The Chancellor is due to lay out departmental allocations running up to 2029 - the likely timetable for the next general election - later today in the Commons. Among the main announcements is expected to be a £30 billion increase in NHS funding, a rise of around 2.8% in real terms, along with an extra £4.5 billion for schools and a rise in defence spending to 2.5% of GDP.

Reeves has been busy haggling with ministers with some desperately trying to get more cash before all settlements were finally reached on Monday.

Inevitably today there will be winners and losers.

Stick with us for the latest news and analysis throughout the day with reporting from MailOnline’s political team plus expert financial insight from our This Is Money team.