Allies of the Deputy Prime Minister have said she has become increasingly exasperated with having to publicly defend Treasury spending cuts and is pushing back in private.

Treasury insiders are understood to be making clear that while Ms Reeves welcomes contributions from all Cabinet colleagues, as Chancellor she decides taxation and spending policy.

The memo looks set to become the blueprint for changes that the Left will push for in the Autumn Budget, amid mounting speculation that Ms Reeves will be forced to raise tax owing to challenging economic forecasts.

Left-wing MPs are increasingly in uproar over the spending squeeze, with Sir Keir Starmer facing growing rebellions over scrapping the universal winter fuel payment and cuts to disability benefits.

On Tuesday, Ms Reeves offered her first public hint that she could change the winter fuel policy, saying she would “listen” to concerns, while on Monday night at a meeting with Labour MPs the Prime Minister was challenged over the welfare cuts. 

It comes amid wider concern on the Left about the direction Sir Keir and his inner circle have taken in recent months, including their efforts to counter Reform’s popularity surge with tougher immigration policies.

Corbyn-style Labour

Commenting on the memo, Mel Stride, the Conservative shadow chancellor, said: “This confirms that we are still living with the Labour Party of Jeremy Corbyn. At the very highest level, Labour ministers are debating which taxes to increase next.”

He added: “The Chancellor has repeatedly refused to rule out another tax raid in the autumn and now we know why – Labour’s top brass, including the Deputy Prime Minister, want to come back for more.”

There continues to be speculation that Ms Reeves will find it impossible to avoid raising taxes once again in her Budget this autumn amid challenging economic forecasts.

The two-and-a-half page memo is stamped “official” and was submitted by Ms Rayner’s team to the Treasury in mid-March, before Ms Reeves delivered her Spring Statement.

The memo was titled “alternative proposals for raising revenue”. The first line stated that the policies “would be popular, prudent, and would not raise taxes on working people”. The last phrase was a promise in Labour’s 2024 election manifesto.

It offered different ways to raise money, with increased taxes on the wealthy put forward instead of spending cuts viewed on the Left as unfairly hitting the vulnerable.

One idea was reinstating the pensions lifetime allowance, which had placed a limit of just above £1 million on how much could be saved in a pension without incurring higher tax charges.