CHANCELLOR Rachel Reeves ducked the hard choices in a bob-and-weave budget today designed to keep the floundering Labour government afloat.

Facing the need to placate both Labour backbench MPs fearing for their future and bond market moguls watching debt projections, Ms Reeves shuffled in a slightly social democratic direction.

She ended the cruel two-child benefit cap to loud cheers from Labour, yet further extended frozen income tax thresholds which will mean more working people paying more tax in years to come.

This broke the pledge she had made not to do so last year but technically remained within the limits of Labour’s manifesto commitment not to raise income tax, employees’ National Insurance or VAT.

The manoeuvres seemed to have worked. On the money markets the pound rose slightly and borrowing costs dropped marginally.

And Labour MPs, including those on the left, seemed to believe that the Cabinet was at long last moving in their direction after rebellions on winter fuel and welfare.

“They’ve blinked,” one told the Star, with several noting the irony of scrapping the two-child cap when seven MPs had been suspended from the Labour whip for voting for just that.

One of them, Richard Burgon, said: “I’m delighted it’s now been scrapped.

“As I did with my vote on the cap, disability cuts and winter fuel, I will continue to fight to improve the living standards of ordinary people.”

Another, Apsana Begum, commented: “Today, a simple choice to scrap the two-child limit was finally made — a choice the government always had. 

“Inequality can be ended not by adjusting the economy but by transforming it, running it in the interests of people.”

The package overall may be enough to stabilise the political position of Sir Keir Starmer and his chancellor for a few months, after weeks of self-inflicted wounds and a year of strategic blunders.

Ms Reeves also introduced a form of mansion tax on high-value properties, a freeze on fuel duty and above-inflation rises in state pensions and the minimum and living wages.

Online gaming taxes are to rise sharply and landlords are to pay a bit more.

Ms Reeves described her measures as “fair and necessary” and Sir Keir called them a “Labour Budget with Labour values”. 

There were few surprises after a series of leaks, culminating in the Office of Budget Responsibility publishing almost everything on its website before the Chancellor had even started speaking.

But there was not the fundamental reset many Labour MPs had been demanding, with no wealth tax, no windfall tax on the banks or energy monopolies, and no new measures to tackle the housing crisis.

Campaigners were largely unimpressed. Faiza Shaheen, executive director at Tax Justice UK, said: “Britain’s economy needed a total renovation, but what we got was a cheap paint job to cover the cracks in the foundations. 

“It is shocking that the biggest revenue raising measure in this Budget, that should have been about taxing the super-rich more, will be a freeze on income tax thresholds that will make working people worse off.”

Stop the War Coalition convener Lindsey German said: “Anyone who says foreign and domestic policy are not linked are wrong. 

“The Chancellor made that clear today in her commitment to Nato and increasing defence spending still further.

“Ministers still justify putting obscene amounts of money into weaponry and building arms factories and warships instead of the infrastructure that creates real, sustainable and green growth and jobs for communities.” 

Renters’ Reform Coalition director Tom Darling commented: “This is not a renters’ Budget — the continued freezing of housing benefit means tenants on low incomes will continue to struggle to keep a roof over their head while paying for the essentials. 

“Soaring rents are a major cause of homelessness, driving renters out of their homes or into poverty.”

Simon Francis of the End Fuel Poverty Coalition said that “any reduction in energy bills will be welcome as households face their fifth winter of the energy costs crisis” but even these changes would leave energy bills hundreds of pounds higher than five years ago.

 And Communist Party general secretary Robert Griffiths slammed the lack of an alternative economic strategy, saying: “Desperate to appease Britain’s super-wealthy capitalist class and the bond markets, Chancellor Reeves has missed an historic opportunity to invest in public services, productive industry, low-cost green energy — and to launch a war on poverty.”

But former premier Gordon Brown welcomed the end of the two-child benefit cap, for which he has campaigned.

“I have an immediate reply to Kemi Badenoch and her Conservative apologists who say they will reinstate this pernicious two-child rule legislation: Shame on you,” he said.

TUC general secretary Paul Nowak also welcomed the package, saying that “the policy decisions announced today will disproportionately benefit those low and middle-income households at the sharp end — and tax increases will fall on the wealthiest.”