Chancellor Rachel Reeves says taxes will likely be raised in the Budget this autumn in major U-turn after election

Rachel Reeves yesterday warned she 'will have to raise taxes' in the Budget this autumn.

During the election campaign, Ms Reeves and Sir Keir Starmer repeatedly claimed they had 'no plans' for tax rises beyond those outlined in Labour's manifesto.

But in a major U-turn yesterday she claimed the real state of the public finances was so dire that a further tax raid in the October 30 Budget was inevitable.

Ms Reeves triggered a furious reaction from the Conservatives this week after claiming they had left behind a £22 billion 'black hole' of unfunded spending commitments this year.

The Chancellor, who faced a backlash yesterday over her decision to axe the winter fuel payment for 10 million pensioners, said funding shortfalls left behind by the Conservatives meant that further tax rises and spending cuts were coming.

She told the News Agents podcast: 'I think that we will have to increase taxes in The Budget.' And she refused to rule out a raid on pensions at the Budget, as she warned of 'more difficult decisions' ahead.

Asked directly whether she could rule out cutting pension tax relief, she told LBC Radio: 'I'm not going to write a budget on this programme, but the commitments we made in our manifesto not to increase National Insurance, VAT or income tax and also the triple lock, our commitments in our manifesto, stand. 

'We will stick by those. But there'll be more difficult decisions to come in the Budget because of the inheritance that we now face.' 

The warning came as Jeremy Hunt called for an investigation into Ms Reeves's claim that he 'lied' about the state of the public finances when he was at the Treasury.

The Chancellor claimed that her predecessor 'knowingly and deliberately... lied' to the public about spending pressures facing the government.

Mr Hunt flatly rejected claims of a 'black hole' and described the Chancellor's assertions as 'deeply troubling'.

In a letter to Cabinet Secretary Simon Case, Mr Hunt said the claim of a £22 billion 'black hole' was 'directly contradicted' by government spending estimates handed to parliament last week, which had been signed off by senior officials.

He said the claims made by Ms Reeves 'risk bringing the civil service into disrepute'.

He also said that spending commitments made by Labour since taking office - including a 22 per cent pay rise for junior doctors - now totalled £24 billion, equal to £1 billion a day.