Andy Burnham has reportedly shelved plans to address the UK's massive welfare bill in this year's Budget – as his Chancellor suggested the October economic blueprint will include a 'mansion tax'.

Two reviews into the problems facing the welfare system will not be completed until shortly before the October 28 Budget and he has decided to focus on how to fund a boost to defence spending first.

This is despite clarion calls for welfare spending to be tightened and the money diverted to the military.

At the same time, new Chancellor John Healey is said to have shelved plans for defence spending to hit 3 per cent of GDP by 2030, despite resigning as Sir Keir Starmer's defence secretary over a lack of money for the Forces.

Tory shadow work and pensions secretary Helen Whately said Labour was 'kicking the can down the road on welfare'.

'First Keir, now Andy. All Labour MPs want to do is put up taxes to spend more on benefits,' she said.

Mr Healey also today signalled that the Budget will include a new top tier of council tax that will hit owners of large homes.

Speaking to Sky News he said the tax was 'evolving', adding: 'Some people call it a mansion tax, but this is a top rate that's not there at the moment and it will help make the system just a bit fairer.

'Because at the moment you've got some people paying the same council tax in different parts of the country for hugely different properties. But these sorts of decisions, if they're relevant to the Budget, I'll set them out in a couple of months time.'  

Ministers have admitted that valuation agents will be able to carry out 'internal inspections' of homes to check if they are worth more than the threshold £2million.

Anyone who refuses a visit from the HMRC inspectors would be committing a criminal offence, punishable by a fine of up to £200.

Last week the former Tory treasury minister hotly tipped to be Mr Burnham's chief economic adviser turned down the role and called for a 'sensible, realistic approach to welfare spending'.

Lord Jim O'Neill denied he had had any policy disagreement with Mr Burnham, but said the UK must tackle welfare spending to bring down debt.

Current estimates suggest the Government is spending around £1billion a day on the spiralling welfare bill.

Reform's finance spokesman Robert Jenrick said: 'Andy Burnham isn't a fresh start - he's just continuity Labour with a new face. 

'The public are being made to endure the same high taxes, same open borders and the same ballooning benefits bill.'