Rachel Reeves has been accused of launching a “class war against Middle England” with Budget plans to slap families in higher value council tax bands with painful new levies. It’s reported the Chancellor has her sights set on increasing payments for already cash-strapped homes by hitting hundreds of thousands of residents with a surcharge worth over £600million.

Ms Reeves has claimed the nation’s finances are suffering from yet another ‘black hole’ and the Treasury is seeking £25billion to balance the books. However, in a dramatic U-turn this week the Chancellor dropped was reported by the Financial Times to have ditched plans to launch a raid on income tax which would have broken Labour’s manifesto pledge.

Now it looks like Number 11 is seeking to find money elsewhere by revaluing 2.4 million of the most valuable homes across council tax bands F, G and H, accounting for one in 10 English homes. If the measure comes into force, properties in London and the South East could be hardest hit.

The Telegraph reports, a seperate surcharge could be adding to existing council tax charges, but it’s still not clear which homes could be affected, potentially leaving millions in limbo over whether they can afford to stay living in their property through no fault of their own.

Sir Mel Stride, the shadow chancellor, accused Labour of engaging in “a class war against middle England”. He told the Telegraph: “If Starmer and Reeves decide to introduce a new tax raid on family homes, they will be punishing aspiration and hitting hard-working people. Under Labour, nothing is safe – not your job, your home, your savings, or your pension.”

According to analysis by the paper, data shows 26 of England’s 296 authorities will see more than a quarter of homes revalued, with 15% of all homes in London and the South East potentially facing higher taxes.

Ms Reeves had been expected to hike income tax in the face of a yawning gap in her spending plans, hinting as recently as Monday that the alternative would be “deep cuts” to public investment. But the Financial Times has reported that she has now abandoned those plans over fears they could anger both voters and backbench Labour MPs.

According to the Financial Times, the decision not to raise the tax was communicated to the Office for Budget Responsibility (OBR) on Wednesday, when the Chancellor submitted a list of “major measures” to be included in her Budget.

An income tax rise would help her bridge a fiscal black hole estimated by some economists to be as much as £50 billion, but it would also break Labour’s clear manifesto pledge not to raise income tax, national insurance or VAT. The prospect of a manifesto breach drew criticism earlier this month from Labour’s new deputy leader Lucy Powell, who said it would damage “trust in politics”.

Having vowed not to return to “austerity” through deeper spending cuts, the Chancellor could now have to rely on increases in a wider range of smaller taxes if she is to stick to her self-imposed rules on debt and borrowing.