CHANCELLOR Rachel Reeves is set to announce a huge new programme of spending cuts as unemployment rises and anger at Labour’s assault on disability benefits mounts.

She will use her spring spending statement next week to unveil a fresh austerity programme as the government continues to rule out tax rises on the wealthy as an alternative.

Despair is turning to anger among backbench Labour MPs and trade unions at the government’s course, which is already seeing Labour plunge to record lows in the opinion polls.

Ms Reeves’s death-wish economics come as official statistics showed joblessness increasing, including among young workers. 

Unemployment is up by 0.1 per cent, with a youth unemployment rate of 12.9 per cent.

Commenting on the figures, Public and Commercial Services union general secretary Fran Heathcote said: “The labour market figures today highlight the cruelty of the government’s reforms to disability benefits.

“Unemployment is rising, and the wider measure of underemployment is now at 4.75 million with only 816,000 vacancies in the economy — meaning there are already nearly six people chasing every vacancy.

“Those figures exclude disabled people currently deemed unable to work or with only limited capacity for work.

“The reality is that the government’s proposals will not help disabled people off of benefits and into work, but off benefits and into deeper poverty.”

Anxious Labour MPs, including many newly elected, are now caucusing as to how best to persuade the government to change course, including through rebellion in the voting lobbies.

Jon Trickett was among those making his position clear, saying “cutting welfare payments to sick people is wrong morally, fiscally and economically and it’s cruel. We are better than this as a country I will vote against when the time comes.”

TUC general secretary Paul Nowak warned that the jobs market was weakening and particularly focused on the position of young people.

“Apprenticeship starts have fallen through the floor,” he said, “while waiting lists for mental health services have rocketed.

“It is crucial that a fully funded and comprehensive Youth Guarantee is put in place to give all young people the best possible start to their working lives.

“Wherever they live, every young person should have access to high-quality training, decent work and proper healthcare.”

That looks unlikely to happen as Ms Reeves prepares to squeeze public spending still further. 

Some departments are expected to suffer as much as 7 per cent cuts in their budgets.

Ms Reeves is committed to maintaining her severe and self-imposed fiscal rules mandating falling public debt while the entire government is hamstrung by its commitments not to raise taxes on the rich and on big business.

Rising interest charges and non-existent economic growth have squeezed her room for manoeuvre between these misjudged pledges, leaving cuts as her only apparent way out.

Ms Reeves got no relief from the Bank of England, which declined to cut interest rates on the grounds that inflation is showing a slight upturn once more, creating a perfect storm of bad news for the Chancellor after earlier figures revealed negative growth at the start of the year.

The £5 billion in cuts to disability benefits announced this week have brought concerns to boiling point, even among the hitherto-loyal. 

Most Labour MPs would much prefer a wealth tax to further spending cuts, but thus far Sir Keir has ruled that out.

Nerves will not be calmed by the latest opinion poll showing Labour trailing the hard right Reform by five points, 22 per cent to 27, with the Tories on 21.

The FindoutnowUK survey would leave Labour without nearly three-quarters of its present Commons seats and Nigel Farage on the threshold of forming a government, although at this stage in a parliament such extrapolations have limited value.