Rachel Reeves warns of challenge facing Labour if the party wins election

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Rachel Reeves has said she is “under no illusions” about the scale of the challenge that lies in wait for Labour if elected after the government adopted two of its policies to fund tax cuts.

The shadow chancellor told the BBC on Sunday that an incoming Labour government would carry out a spending review shortly after entering office but she was unable to rule out possible cuts in public services.

Reeves said she would work “methodically” to identify funding for Labour’s spending plans after chancellor Jeremy Hunt adopted the party’s revenue raising measures of scrapping the non-dom tax regime and extending the oil and gas windfall levy.

“I have to be honest that we’re not going to be able to turn things around straight away. But we will get to work on all of that,” she said.

Her comments came after Hunt announced a 2p cut in national insurance costing £10bn a year in his Budget. Voters remain split over whether they prefer tax cuts or increased public spending.

About 36 per cent of voters would prefer an increase in spending on public services even if they pay more in tax compared with 33 per cent who want the government to prioritise tax cuts, according to pollsters Ipsos.

Tory MPs fear Wednesday’s Budget may do little to move the needle among voters, with some calling it a “non-Buzz Budget”.

Prime Minister Rishi Sunak said on Sunday the government wanted to abolish national insurance entirely in the next parliament to end the “unfair” system of “double taxation” of income tax and national insurance.

In an interview with the Sunday Times, Sunak said he planned to consult on new plans to reduce working-age benefits to help fund further tax cuts.

“We now have almost 2.5mn working age people who have been signed off as unfit to work,” he said.

Labour has said that abolishing national insurance would cost £46bn a year and…