Speaking in Parliament today, Rachel Reeves described the inheritance left to her by the previous government was “unforgivable” and said it had given the public “false hope” by making unfunded promises.

She said that as a result she would have to make “difficult decisions” to stabilise the economy in her upcoming Budget.

Speculation has been mounting that the Chancellor is planning to increase capital gains tax in line with income tax to raise revenue.

Some have suggested she could also target inheritance tax to raise more money.

In her speech today, Reeves said she would be asking government departments to find savings and that she would be introducing a multi-year spending review as part of this autumn’s Budget.

She announced that she would be taking legislative steps to ensure that there could never be a repeat of Liz Truss’s disastrous mini-budget as well as to prevent ministers from covering up the true state of the public finances as she claimed the Tories have done.

In an unexpected move, she also said that the winter fuel payment for pensioners would be limited to those on pension credit.

And although the Government is still committed to exiting its shareholding in NatWest by 2025/26, the Chancellor said it would no longer be making a discounted share offer to retail investors as the Conservatives had planned.

Reeves said: “The Government published its plans for day to day spending in the spring budget in March.

“But when I arrived at the Treasury, on the very first day, I was alerted by officials that this was not how much the previous government expected to spend this year.

“It wasn’t even close.”

She added: “It means, Mr. Speaker that we have inherited a projected overspend of £22bn, or a £22bn pound hole in the public finances now, not in the future.

“It was covered up by the party opposite. If left unaddressed, it would mean a 25% increase in the budget deficit this year.”