UNIONS, MPs and campaigners reacted with fury after the Treasury backed plans to slash billions from welfare spending in an “outrageous attack” on the poorest.

Chancellor Rachel Reeves was today urged to tax the rich instead after government sources said the cuts were necessary as the “world has changed” since her autumn budget.

The furore was sparked after an early draft of Budget watchdog the Office for Budget Responsibility’s (OBR) forecast was leaked to the BBC.

It suggests that the £9.9 billion of headroom it said she had against her self-imposed fiscal rules in October have been wiped out by lower expected economic growth and higher government borrowing costs.

A government insider said: “The OBR will reflect that changing world in its forecasts later this month and a changing world will be a core feature of the Chancellor’s response later this month.”

Curbing the cost of welfare and a drive for “greater efficiency” — cuts — across Whitehall are now expected to contribute the bulk of the savings when she announces her Spring Statement on March 26.

Today Justice Secretary Shabana Mahmood insisted that there is a “moral case” for cutting the welfare bill following the watchdog’s latest forecasts.

Prime Sir Keir Starmer last week announced a £6bn a year rise to military spending, to 2.5 per cent of GDP by 2027.

Former Labour leader Jeremy Corbyn MP said: “Labour could tax the super-rich to raise funds for schools, hospitals and social housing.

“They are going after the poorest and slashing welfare instead.

“Isn’t it strange how ‘difficult choices’ always seem to harm the most vulnerable?”

And Leeds East MP Richard Burgon said: "We should not be balancing the books on the backs of the poorest and most vulnerable.

“We live in one of the richest countries in the world, so the super-rich — who have done so well in recent years — should be made to pay their fair share.

“I am calling for a wealth tax — that’s the progressive alternative we need, not more cuts and austerity.”

Labour Alloa and Grangemouth MP Brian Leishman said: “I didn’t become a Labour Party member, or a Labour councillor or a Labour MP, to cut welfare for those people that desperately need help.”

Resolution Foundation CEO Ruth Curtice told the Today programme: “I wouldn’t borrow more but I do think there’s an argument not to cut welfare spending but to look at taxes instead, welfare spending obviously hurts the lowest income families.

“There are tax rises and there are tax rises: the Chancellor does have the option for example to continue the [income tax] threshold freeze that’s been in place for a number of years, that’s already continuing until 2028, she could extend it for another two years, that would raise money in the forecast but wouldn’t hit people’s pockets now.

“We know that the government is thinking very seriously about the rise in the bill for health and inactivity — they are right to do that but it’s unlikely that short-term cuts are the way forward.”

Unions urged the government not to repeat Tory austerity.

PCS general secretary Fran Heathcote said: “Cutting Civil Service jobs will damage public service and cutting disability benefits will condemn people to poverty.

“We’d hoped we wouldn’t have to explain the damage wreaked by austerity to a Labour government.”

National Education Union general secretary Daniel Kebede said: “This is a disaster in the making for millions of people. 

“Schools are witnessing the effects of the punishingly inadequate benefit system and the two-child benefit cap.

“A further cutback to the already meagre benefit system will only add to this misery.”

Fire Brigades Union general secretary Steve Wright said that cutting billions of pounds from welfare would be a return to the austerity of George Osborne and the Tories and “an outrageous attack on the poorest and most vulnerable.

“The Chancellor must use her Spring Statement to tax the rich to properly fund public services and increase pay.

“Rachel Reeves must not become Labour’s ‘austerity Chancellor’.”

National secretary of the People’s Assembly Ben Sellers said that Sir Keir Starmer and Ms Reeves are not interested in the alternatives to targeting the disabled and most vulnerable as they “are wedded to a pernicious and militaristic neoliberalism which is failing all over the world.” 

And a Momentum spokeswoman said: “The Labour government’s decision to prioritise military spending whilst cutting welfare budgets will bring further austerity to Britain.”

SNP Westminster leader Stephen Flynn MP accused Labour of “a total betrayal of what voters were told at the election.”