Rachel Reeves slammed by Labour grandee over Budget plans for retirees

Rachel Reeves's pensions tax raid risks leaving millions of retirees with less money and lower living standards, Lord Blunkett has warned.

The former work and pensions secretary said he would "advise strongly against" the Chancellor imposing National Insurance on employers' pension contributions.

The measure, which is widely expected to be unveiled in the Budget on Wednesday, is expected to raise £20 billion and will reimburse public sector employers - such as the NHS and government departments.

But in a letter to The Times, Lord Blunkett described the move as "very worrying", adding: "It is one thing to increase the rate of National Insurance, and quite another to levy this on employer pension contributions.

"As the former work and pensions secretary of state... I would advise strongly against this."

His warning comes as Shadow Chancellor Jeremy Hunt accused Ms Reeves of breaking her promise not to fiddle the fiscal rules.

He said: "The Chancellor's announcement that she will change the fiscal rules is yet another broken promise.

"She told the public very clearly before the election that any change to the fiscal rules would amount to 'fiddling the figures' and that she would use the same measure of debt as the previous Conservative government and not simply change it to 'get a better result'.

"And yet this week the Chancellor has broken that promise - doing what she said she wouldn't. 'Fiddling the figures' to 'get a better result' and opening the door to borrow billions more.

"What's more remarkable is that she sought fit to announce this in Washington rather than in Parliament."

Mr Hunt said that Treasury officials were always clear that an increase in borrowing could mean interest rates staying higher for longer - and working people with mortgages would pay the price.

"The markets are watching. Borrowing costs have already risen which means the government will spend billions simply spent on maintaining our own debt instead of funding our public services," he added.

"And with higher costs of interest for this borrowing the market could end up more than wiping out any of the additional funding for projects the Chancellor will announce next week - and all at the expense of the taxpayer."

The former Chancellor said this "will not be the last of Labour's broken promises".

"Their manifesto states clearly that they would not raise taxes on working people, yet the Prime Minister has no clue as to what the definition of a 'working person' even is.

"So next week it's clear that everyone will bear the brunt of Labour's tax rises. The only scandal is they planned this all along, they just didn't have the courage to tell the public at the election."