A £3 billion boost for the armed forces is expected as Reeves unveils Labour’s first budget

The armed forces are set to get a £3 billion boost, according to reports, as Rachel Reeves prepares to unveil the Labor government’s first budget.

The Chancellor will announce an increase in next year’s defense budget in her budget statement in the House of Commons on Wednesday, part of which will be used to give soldiers a pay rise backdated to April, the Telegraph reported.

The funding will also be used to purchase weapons, with the aim of replenishing supplies depleted by donations to Ukraine.

A route demanded by the Tories to increase defense spending to 2.5% of national economic output will not be in the Budget.

Ms Reeves will make history as Britain’s first female chancellor when she announces Wednesday’s budget.

She is expected to say in her speech that the “price on offer” is “immense”, and that she will release new funding to reduce hospital waiting lists, pave the way for more affordable housing and rebuild crumbling schools.

She will add: “More kilos in people’s pockets. An NHS that is there when you need it. An economy that grows and creates prosperity and opportunities for everyone. Because that is the only way to improve living standards.”

Harking back to the Labor governments of Attlee, Wilson and Blair, Ms Reeves will say it is “not the first time it has been up to the Labor Party to rebuild Britain”.

The Chancellor has warned that the tax rises and borrowing increases she is considering may not be enough to undo “14 years of damage” to the NHS, despite plans to pump billions of pounds into the health service.

In addition to its budget analysis, the budget watchdog, the Office for Budget Responsibility (OBR), will publish a report on the Conservative legacy in government, which is expected to be responsible for the so-called £22 billion “black hole” in the public finances.

Shadow Chancellor Jeremy Hunt disputes the report, claiming in a letter to top civil servant Simon Case that the OBR risks “straying into political territory and failing to follow a fair process”.

Other budget developments include:

– A 6.7% increase in the minimum wage – confirmed by Ms Reeves – meaning it will rise to £12.21 per hour next year.

– More funding for the NHS, including £1.5 billion for new surgical hubs and scanners and £70 million for radiotherapy machines.

– Increases in taxes, including fuel duty, inheritance tax and capital gains tax, are reportedly being considered.

– Labor has pledged not to increase general taxes on “working people” paycheques: national insurance, VAT and income tax.

– Business rates reforms could be on the way, Ms Reeves hinted in the House of Commons, “as well as a business tax roadmap”.

– £240 million of funding for local services will be spent to help people back into work, Sir Keir Starmer revealed earlier this week.

– The £2 cap on bus fares across England will rise to £3.