Chancellor Rachel Reeves has announced a massive £40bn package of tax rises to fund the NHS and public services in Labour’s first budget for 14 years.

But she insisted “working people” would not see a rise in income tax, national insurance and VAT, fulfilling a Labor promise at the general election.

Employers will take the biggest hit – with a rise in National Insurance contributions on their workers’ earnings set to raise up to £25 billion a year for the government.

Conservative leader Rishi Sunak accused Reeves of breaking his promises to workers and of “stifling” economic growth.

“They tax your job, they tax your business, they tax your savings. You name it, they will tax it,” Sunak told MPs in his final appearance in the Commons as leader of the opposition.

But Reeves argued that any “responsible chancellor” would have been forced to do the same to “fix the foundations” of the economy.

In a marathon 76-minute speech, she said Labor would deliver on its promise to voters in July’s election to “invest, invest, invest” to “drive economic growth”.

Labor had said its number one “mission” was growth – and that it would achieve the highest growth rate of any G7 country within five years.

However, the Office for Budget Responsibility assessment was that the package of economic measures ultimately “leaves GDP broadly unchanged in five years’ time”.

Labour’s first budget since 2010 sees the second biggest increase in taxes in UK history.

Measured as increased tax in relation to the size of the economy, it is slightly less than Conservative Chancellor Norman Lamont’s 1993 budget.

But in a surprise move, Reeves decided not to continue the freeze on income tax thresholds beyond 2028, which would have drawn millions of people into the tax system for the first time or forced them to pay higher rates.

And she announced changes to Labour’s self-imposed borrowing rules to allow the government to pump billions into Britain’s infrastructure and fund improvements to crumbling schools and hospitals.

She also froze petrol duty for next year – keeping a 5p cut introduced by the Tories due to expire in April.

But she said a £22bn “black hole” inherited from the previous government meant tax rises were needed.

In what was the first Budget speech by a female chancellor in UK history, Reeves told MPs: “This is a moment of fundamental choice for Britain.

“I have made my choices. The responsible choices. To restore stability to our country. To protect working people.

“More teachers in our schools. More appointments in our NHS. More homes being built.

“Fixing the foundations of our economy. Investing in our future. Delivering change. Rebuilding Britain.”

The OBR’s forecast suggested gross domestic product growth will be higher in 2024 than expected in March – upgrading it from 0.8% to 1.1% and from 1.9% to 2.0% in 2025.

But there are downgrades in subsequent years – down from an expected 2% in 2026 to 1.8%, from 1.8% in 2027 to 1.5% and from 1.7% in 2028 to 1.5%.

Borrowing is expected to reach 127 billion pounds this year.