The Tories warned Labour are preparing to raise taxes after Rachel Reeves refused three times to rule out hikes.

The Chancellor today declined to commit to not increasing inheritance tax or capital gains tax in October’s Budget.

Ms Reeves, who is facing intense pressure over axing winter fuel payments, said she had to make “difficult decisions” as she repeated her claim about a £22 billion black hole in the public finances left by the Conservatives.

But shadow chancellor Jeremy Hunt insisted her arguments about Labour’s economic inheritance “will not wash with the public”.

Asked repeatedly if she could rule out increasing capital gains tax and inheritance tax during a visit to Scotland, Ms Reeves said: “I’m not going to write a Budget two months ahead of delivering it. We’re going to have to make difficult decisions in a range of areas.

“Much work is needed to rebuild the foundations of our economy so we can rebuild Britain and make working people better off, and that is why growing our economy is absolutely essential.

“Unless we grow the economy, we’re going to continue to be in a situation where taxes are at too high a level and public spending is not sustainable.

“We’ve got to break out of this doom loop, which is why growing the economy is the number one priority of this new Government.”

Ms Reeves also defended the controversial axing of winter fuel payments for millions of pensioners amid a furious backlash.

The Daily Express is campaigning for the new Government to U-turn on its decision to restrict the payments to only those in receipt of pension credit.

She said: “When I became Chancellor of the Exchequer, I inherited a £22 billion black hole in the public finances.

“Taking no action wasn’t an option, because that would have made it difficult for the Government to finance its needs, and we would have ended him up in the same position that the previous Conservative government ended up in, with mortgage rates and interest rates spiking and pensions being put in peril.

“So we had to take difficult decisions in very challenging circumstances, because the previous government was overspending by £22 billion just this year alone, and we’ve had to take action to get approval for public finances.”

She added: “It’s not decision I wanted to make. It was a decision that I had to make in incredibly challenging circumstances to put our public finances on a firm footing.”

But Mr Hunt warned that Prime Minister Sir Keir Starmer – who has admitted the upcoming Budget will be “painful” – and Ms Reeves are “laying the ground” to hike taxes.

The shadow chancellor said: “The Chancellor’s attempt to blame her economic inheritance on her decision to raise taxes – tax rises she had always planned – will not wash with the public.

“Reeves and Starmer have spent weeks talking down the economy, whilst simultaneously handing over billions in inflation-busting pay rises for their union paymasters. It simply does not add up.

“Labour promised over 50 times in the election they would not raise people’s taxes and now they are laying the ground to do just that. We will hold them to account on their promises.”

Shadow Chief Secretary to the Treasury Laura Trott said: “Rachel Reeves clearly has still not found the courage to be honest with the British public.

“After spending billions of pounds in inflation-busting pay deals to appease their union paymasters, the Chancellor’s fabricated blackhole narrative is in tatters, and yet she is still trying to desperately spin this yarn.

“Labour promised over 50 times during the election campaign not to raise taxes. The British people will not forgive the betrayal when they do.”

Shadow Home Secretary James added: “Despite promising that they would not tax working people, the Labour Party will levy the biggest taxes on aspiration for a generation this autumn.

“They are laying the ground for tax rises which are a political choice to pay back their union bosses. Everything from your house to your inheritance, your shares and school fees, are under threat.

“The instinct to work hard to provide for your family, to grow your business, to pass on a better community and country to the next generation is under fire from Starmer and Reeves. Their taxes on aspiration will cost this country dearly.”

Veteran Conservative MP Andrew Rosindell urged his party to channel Margaret Thatcher in its response to Labour.

He said: “I think a lot of people who voted Labour must be feeling deeply betrayed by so many actions of the Labour Government since they took office only just over 50 days ago.

“The latest from Rachel Reeves in refusing to rule out an increase in capital gains tax, but also in inheritance tax, I think it going to be a body blow to a lot of people.

“Frankly it’s no way to build a strong economy, it’s no way to attract investment, it’s no way to keep entrepreneurs and the people that are actually the wealth generators in this country.

“Labour seems to have a very short-sighted view of things. In fact they’ve learnt no lessons from previous socialist governments that have tried similar things and it’s all fallen into disrepair and I fear this Government is heading in the same direction.

“So the Conservative Party needs a very robust response to all this, we need to look back to the lessons of the 1970s when Mrs Thatcher was facing a Labour government making similar kinds of mistakes.”

The Romford MP added that there “appears to be an ongoing assault on older people in this country, many of whom are already struggling to make ends meet”.

He said: “So for them to have loss of their winter fuel allowance, to be paying more taxes and then to have no hope on inheritance tax, I just think it’s appalling.”

Mr Rosindell added: “After the election we handed over a much better situation that Labour are prepared to admit honestly.

“I think all they will achieve in increasing the size of the state and spending more taxpayers’ money and disincentivising people to work and invest in this country. I think it will actually cause Britain to spiral further down rather than climb back up.”

Shadow security minister Tom Tudendhat, who is also running in the Tory leadership race, will tomorrow accuse Labour of dishonesty over the state of the public finances after bumper pay offers to striking workers.

In a speech on Thursday afternoon, he is expected to say: “The so-called fiscal black hole the Chancellor has invented since the election consists of normal in-year spending pressures… and her own decisions on public sector pay.

“And this is the point. Labour are pretending they have no option but to do what they are doing. But this is untrue.

“They are doing what they are doing because they have made a choice to do it – and a choice to be dishonest about it.”

It comes as there is intense speculation over what will be in the Budget on October 30 after Sir Keir warned it would be “painful” and “those with the broadest shoulders should bear the heavier burden” during a Downing Street speech on Tuesday.