Where does the £22bn black hole come from?published at 10:10 Greenwich Mean Time

10:10 GMT

By Anthony Reuben

The starting point for the tax rises expected in Wednesday’s Budget is the £22bn “black hole” in the public finances.

We first saw that figure in a government publication in July, shortly after Labour came to office.

It does contain overspends for the current year, which the government can reasonably claim not to have known about, and there is a report due from the Office for Budget Responsibility on Wednesday about how that could have happened.

But there are also things that the government says need extra funding that organisations, such as the Institute for Fiscal Studies, say it should have known about during the election campaign.

You can read more about it here.

Let's bring you a bit more context on Labour's attempts todefine who "working people" are, after the Conservatives accused Labour of "reinventing" what counts as a working person ahead of the Budget.

At the general election, Labour promised not to increase taxes on working people - but did not define who it had in mind.

The governmentis reportedly looking at increasing tax on asset sales, such as shares and property, freezing income tax thresholds, and changes to inheritance tax.

Sir Keir Starmer insists working people will not be hit by these changes - but he has struggled to define who exactly he is seeking to protect from tax rises.

Asked in an interview last week whether those who work, but get additional income from assets such as shares or property, would count as working people, Starmer said they "wouldn't come within my definition". Although he warned against making "assumptions" about what that meant for tax policy.

Cabinet minister Pat McFadden has been pushed to clarify who the Labour government considers to be "working people".

As a reminder, Labour promised not to increase taxes on "working people" - but the party did not define who it had in mind.

"I honestly think this thing about income levels and job descriptions is not the right way to look at this,” McFadden tells the BBC Radio 4's Today programme this morning.

He avoids answering questions about why certain groups - such as landlords and small business owners - may not be considered "working people" – something the Tories have recently criticised the PM for.

"The right way to look at this, is will we stick to the manifesto promises that we made on tax? And we will, and you'll see that when the Chancellor gets to her feet," he adds.

McFadden promises the end of "fiscal fiction" in Wednesday’s Budget, which he describes as "things being announced which had no money set aside for them".

Because of this, McFadden claims the Budget will be "the most honest budget you've had in many years".

Each year, the Chancellor of the Exchequer - who is in charge of the government's finances - makes a Budget statement in the House of Commons.

This outlines the government's plans for raising or lowering taxes and sets out its spending commitments for health, schools, police and other public services.

Rachel Reeves will deliver her first Budget on Wednesday, when we can also expect a report to be published by the Treasury setting out further details about the measures and what they will cost.

As we've been reporting, the independent Office for Budget Responsibility (OBR) will also release their review of the so-called £22bn public finance "black hole" on Wednesday, leading to a row with Jeremy Hunt, the former Conservative chancellor.

Faisal Islam & Michael Race
Economics editor & Business reporter, BBC News

Image source, Getty Images

A row has broken out between the UK's financial watchdog and former Conservative chancellor Jeremy Hunt over a review into the so-called £22bn "black hole" in the public finances Labour claims it has inherited.

Rachel Reeves, the chancellor, is expected to raise several taxes in her Budget on Wednesday to cover the claimed shortfall.

But Hunt says a report to be released on the same day by the Office for Budget Responsibility (OBR), which is independent of the government, will criticise his party and help make the case for Labour's tax rises.

Richard Hughes, boss of the OBR, defended the decision, external to publish the report on Budget day, and told Hunt it would not include "decisions of ministers".

The OBR will be publishing its assessment of the chancellor's economic policies and also release forecasts of their impact on the UK economy over the next five years.

Read more on Hunt's claim

Image source, Reuters

One of the tax hikes that we're expecting the chancellor to announce on Wednesday is an increase to the National Insurance rate that employers pay.

Rachel Reeves is also expected to lower the threshold for when employers start paying the tax.

Combining those two measures will raise about £20bn, thought to be the single largest revenue raiser in the Budget.

Employers currently pay National Insurance of 13.8% on a worker's earnings above £175 a week. Raising that to 15.8%, for example, would raise about £18bn a year, according to Treasury data.

The government say that "there is a universal consensus that the NHS needs more money. That means asking businesses to help out."

Faisal Islam
Economics editor

Image source, Jessica Taylor/Reuters

There is no special Budget red box commissioned for Rachel Reeves when, mid-morning on Wednesday, she becomes the first woman to brandish one outside Number 11.

There will be no such frills, few jokes and don’t expect a big rabbit out of the hat.

The number crunchers, bean counters, and abacus economists, so derided by Liz Truss, have taken back control. In that reused Red Box will be a boffin’s Budget.

Indeed, it could be defined by being the polar opposite of everything in Truss and her chancellor Kwasi Kwarteng’s infamous mini-Budget two years ago.

This time the OBR has carried out its full 10-week, back-and-forth audit of both the public finances and all the tax and spend policy measures Reeves is planning, adding to what has felt like a drawn-out timetable of pre-Budget preparation.

Read the full story on the lead up to, and what to expect from Wednesday's budget.

Image source, Reuters

We're expecting to hear from Sir Keir Starmer later this morning and, like a lot of political speeches, we have a rough idea of what the prime minister is going to say.

Starmer will warn of the "unprecedented" challenge of weak public finances alongside "crumbling public services," but he will face what he calls "the tough decisions".

The government is expected to announce a series of expected tax hikes this Wednesday in Labour's first Budget in almost 15 years.

That is likely to include a rise in National Insurance paid by employers which some claim breaks Labour's manifesto pledge not to increase taxes for "working people".

• Read more: PM warns of 'harsh light' of reality ahead of Budget

Hello and welcome to our live coverage, with the PM due to make a speech ahead of Wednesday's Budget.

Sir Keir Starmer this morning will say that Britain "must embrace the harsh light of fiscal reality" - but will also promise "better days are ahead".

Tens of billions of pounds in tax rises and spending cuts are expected. The Conservatives say Starmer is running a government of broken promises.

Stick with us as we take you through the build up to the speech, and the event itself.