Chancellor Rachel Reeves refused to rule out tax increases as she unveiled plans to spend billions of cash on transport schemes. Her comments will hike up concern that new tax rises may be coming in the autumn Budget.

The Chancellor was challenged to be “honest with the public” and admit she faces a stark choice of “really deep cuts” and “future tax rises”. Ms Reeves was asked whether she would bow to pressure within her own party to introduce new “wealth taxes” or consider pushing up council tax on bigger homes.

Last year the Chancellor shocked employers with the hike in their National Insurance Contributions and there was also fury at inheritance tax changes which will hit farming families. Ms Reeves was careful not to box-in her options when quizzed after her speech on funding for transport improvements.

She was put on the spot by Sky News’ Beth Rigby, who said: “Chancellor, in the past two weeks, voters have heard about big increases in defence spending, a reversal of cuts to the winter fuel allowance [and] potentially lifting the two-child benefit cap and they wonder how you are going to pay for all of these additional commitments. The Deputy Prime Minister, Angela Rayner, is pressing you for more wealth taxes, [Greater Manchester Mayor] Andy Burnham thinks that you should look again at council tax so that people with bigger homes potentially pay more.

“You’ve ruled out changing your fiscal rules, can you be honest with the public that you cannot rearm and do all the rest on welfare without either really deep cuts elsewhere or future tax rises. So, Angela and Andy have a point?”

Ms Reeves launched into a staunch defence of how the Government can spend more on the military.

She said: “The increase in defence spending that underpins the strategic defence review that was published earlier this week is funded by a commensurate reduction in the international aid budget. We took that down from 0.5% of GDP to 0.3% of GDP so we could lift defence spending from 2.3% of GDP to 2.5% of GDP so that is fully costed and fully funded.

“As we have been clear on winter fuel we will set out how we will fund that… We’ll set out how everything will be paid for in the Budget in the autumn. But it is important that we do is funded because that’s how people know that we can afford it.”

The Labour manifesto contained pledges not to raise income tax, National Insurance or VAT, and Ms Reeves described these commitments as “promises that we stand by”.

The Chancellor also stressed she did not expect the coming Budget to feature tax hikes on the scale of last year’s.

She said: “We made decisions in the Budget last year to increase taxes by £40billion. I have absolutely no intention of repeating a Budget on that scale again.

“That Budget was absolutely necessary because the previous Government left a £22billion black hole in the public finances.”