A “stealth tax bombshell” will be dropped by Chancellor Rachel Reeves in next year’s Budget statement on November 26, Conservative Party leader Kemi Badenoch has claimed.

The Tory boss will use a London press conference tomorrow to launch a fierce attack on the Chancellor’s anticipated Budget measures, with some analysts predicting an extension to the existing freeze on tax thresholds.

Ms Badenoch intends to condemn what she describes as Ms Reeves’s plan for a fiscal assault on working people through fiscal drag, which occurs when tax allowances are frozen during a time when incomes or inflation are on the rise.

While this generates billions for the Treasury, critics of this policy note how it punishes working-age people by pulling them into higher tax brackets via stealth.

Her intervention comes as the Chancellor is understood to be considering maintaining frozen tax bands until 2030 to generate funds for increased welfare expenditure.

Ms Badenoch will argue that Labour’s reversal on benefit restrictions, prompted by internal party dissent, has created a funding shortfall requiring approximately £8.5billion in additional revenue.

According to analysis from the Institute for Fiscal Studies (IFS), maintaining the current freeze on income tax and national insurance thresholds for an additional two years would generate approximately £8.3billion annually by 2029-30.

Furthermore, the Opposition leader will assert that Prime Minister Keir Starmer has abandoned £5billion in planned welfare reductions after facing resistance from Labour MPs.

Additionally, she anticipates the gGvernment will abolish the two-child benefit restriction, creating a combined welfare expenditure increase of roughly £8.5billion that requires alternative funding sources.

At tomorrow’s press conference, Mrs Badenoch will declare: “We need to call this out for what it is: Labour are raising taxes to pay for Keir Starmer’s weakness on welfare cuts.”

She will argue that the Prime Minister “has already U-turned on £5billion of welfare savings in the face of pressure from his left-wing backbenchers.”

The Conservative leader will add: “And because Starmer has no backbone, he is now set to lift the two-child benefit cap. That’s around £8.5billion of additional welfare spending.”

Ms Badenoch will state: “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.”

The Government has mounted a robust defence against these allegations from Ms Badenoch, whose party is trailing Reform, Labour and the Green Party is the polls.

A Labour representative responded: “It’s astonishing that the Tories have the barefaced cheek to lecture anyone.”

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

The spokesperson emphasised that both welfare expenditure and national debt increased under Conservative governance whilst public services faced severe reductions.

As well as this, Labour warned that Tory proposals would involve £47billion in spending cuts, affecting hospitals, schools and police services across the country.

Chancellor Rachel Reeves will unveil her Budget proposals on November 26.