Farage and Badenoch step up Budget pressure on Reeves

Rachel Reeves is facing pressure from Reform UK and the Conservatives to cut spending rather than hike taxes to fill her Budget black hole.

Nigel Farage will set out how he would block European Union citizens in the UK from claiming benefits and slash foreign aid spending, as part of a package to save £25 billion this year.

Meanwhile, Tory leader Kemi Badenoch will accuse Ms Reeves of plotting a “stealth tax bombshell” to fund increased welfare payments because of her failure to cut the benefits bill.

Both the Tory and Reform leaders will set out their plans in speeches in London ahead of Ms Reeves’ November 26 Budget.

Reform’s plans would cut foreign aid to £1 billion, which it claimed would save about £10 billion.

Ending universal credit payments to foreign nationals would save £6 billion this year, the party said.

Other proposals include raising the immigration health surcharge from £1,035 a year to £2,718, which it claimed would raise £5 billion.

The entitlement for EU citizens with settled status to claim benefits is enshrined in the Brexit deal, but Reform said that if Mr Farage was prime minister he would renegotiate that.

Deporting all foreign criminals would save £580 million, while previously announced plans from Reform to restrict the personal independence payment would save £3.5 billion, the party said.

Reform’s head of policy, Zia Yusuf, told The Times: “Labour has a choice. They can either go ahead and raise taxes on British citizens or they can enact our proposals which put British people first and ask foreign nationals to bear the brunt of the black hole, not British citizens.

“Most British people would consider it outrageous to expect British people to pay higher taxes or see their services cut whilst their money is being spent this way.”

Reform would give EU citizens who are claiming universal credit three months notice as part of a transitional period before ending their payments.

If the EU refused to accept the terms, a Reform UK government would take unilateral action, regardless of the threat of “trade retaliation”, The Times reported.

A Labour Party spokesman said: “Nigel Farage’s fantasy numbers don’t add up, and he’d leave British taxpayers footing a hefty bill.

“Farage is happy to slap British shoppers with higher prices at the checkouts by risking a trade war with Europe.”

Mrs Badenoch will say the U-turn on welfare reforms following a Labour revolt and the expected scrapping of the two-child benefit cap will leave Ms Reeves needing to find £8.5 billion.

The Chancellor is thought to be considering extending the freeze on taxation thresholds to help plug the gap in her spending plans and bolster the “headroom” she has to avoid breaking her Budget rules.

Freezing the personal tax thresholds means that, as wages rise, more people get dragged into paying tax or shifted into higher bands.

Keeping national insurance and income tax thresholds frozen for two further years until April 2030 would raise around £8.3 billion a year by 2029–30, according to the Institute for Fiscal Studies.

Mrs Badenoch will claim Sir Keir Starmer and Ms Reeves are considering “freezing income tax thresholds so that more and more people are dragged into higher rates through a stealth tax bombshell”.

Mrs Badenoch will say: “They’re hiking taxes on people in work, to give handouts to people on benefits, the last group of people who might still vote Labour.

“It’s not fair, it’s not right, and we will oppose them every single step of the way.”

A Labour spokesman said: “It’s astonishing that the Tories have the barefaced cheek to lecture anyone.

“After crashing the economy which sent mortgages rocketing, and leaving a £22 billion black hole in the public finances, Kemi Badenoch is still yet to apologise.”