How much more tax can we take? Rachel Reeves hints burden will rise AGAIN to fund defence boost - as Labour refuses to cut welfare

By JAMES TAPSFIELD, UK POLITICAL EDITOR and JOHN-PAUL FORD ROJAS, DEPUTY BUSINESS EDITOR Published: 08:04, 10 June 2026 | Updated: 08:29, 10 June 2026 Rachel Reeves has hinted Brits will face even more taxes to fund a boost to defence spending. The Chancellor gave the grim signal as frantic wrangling continues in Whitehall over how to pay for bolstering the country's military. Keir Starmer is desperate to get the long-awaited Defence Investment Plan out tomorrow, but the Treasury has been playing hardball over how much money can be allocated. As well as a multi-billion pound shortfall in existing budgets, there are disagreements over how and when targets for increasing spending can be reached. The Government's room for manoeuvre is limited after a revolt last year torpedoed efforts to curb spiralling sickness benefits.  It emerged last week that Work and Pensions Secretary Pat McFadden privately complained that Labour MPs only cared about who they can 'tax in order to pay benefits to others'.  Rachel Reeves has hinted Brits will face even more taxes to fund a boost to defence spending Your browser does not support iframes. Departments are thought to have been asked to stump up an average of 1 per cent of their capital budgets to help raise £6billion towards the cost of the DIP. The raid could hit school and hospital programmes as well as delaying transport infrastructure projects. But Ms Reeves has been making clear that savings elsewhere are unlikely to be enough.  Speaking at a conference in the City yesterday, the Chancellor said her Budget 'headroom' would not cover all the extra spending. She added: 'The first duty of government is to keep its people safe. 'In the world in which we live today it's increasingly clear that us and other European countries are going to have to spend more on defence but crucially spend that money better. 'That should have a boost for our defence industry. 'But the money has to come from somewhere and borrowing cannot always be the answer.' She said 'getting a grip' on public finances had meant interest rates have been able to come down. Ms Reeves added: 'It is bearing results but I would argue that despite the pain of higher taxes, better to do that than to get into a situation that we were in before that we had interest rates climbing and the risk premium for the UK climbing too.' The announcement, when it comes, will be accompanied by an increase in defence spending of around £15billion, bargained down from an initial £18billion by the Treasury.  Ms Reeves has already pushed the tax burden towards a never-before seen peak, but there are concerns that a Labour lurch to the Left could spark another spending splurge and drive up borrowing costs.  There are signs of a developing 'bidding war' between rivals hoping to wrestle the keys to Downing Street from Sir Keir.  In under two years the Chancellor has imposed measures raising an extra £75billion annually.  The staggering tally makes her the biggest tax-raising Chancellor in the last six decades, far ahead of her nearest competitor for the dubious distinction. There are signs of a developing 'bidding war' between rivals hoping to wrestle the keys to Downing Street from Keir Starmer Your browser does not support iframes. That was fellow Labour politician Gordon Brown, whose fiscal statements added up to an extra £62.1billion. The Treasury's OBR watchdog forecast in March that the tax burden will reach a never-before seen mark of 38.5 per cent of GDP in 2030-31. That was even higher than the 38.3 per cent envisaged before.  The watchdog has raised concerns the Government is relying on a small base of better-off taxpayers for the bulk of revenues, while the 'stealth raid' of freezing earnings thresholds is very sensitive to changes in inflation and earnings.  The comments below have not been moderated. The views expressed in the contents above are those of our users and do not necessarily reflect the views of MailOnline. By posting your comment you agree to our house rules. Do you want to automatically post your MailOnline comments to your Facebook Timeline? Your comment will be posted to MailOnline as usual. Do you want to automatically post your MailOnline comments to your Facebook Timeline? Your comment will be posted to MailOnline as usual We will automatically post your comment and a link to the news story to your Facebook timeline at the same time it is posted on MailOnline. To do this we will link your MailOnline account with your Facebook account. We’ll ask you to confirm this for your first post to Facebook. You can choose on each post whether you would like it to be posted to Facebook. Your details from Facebook will be used to provide you with tailored content, marketing and ads in line with our Privacy Policy.