The Chancellor will stress he is prepared to make “difficult decisions” on tax rises and spending cuts as he delivers his first Budget today.
While striking an upbeat note on the prospects for the economy, with new Office of Budget Responsibility forecasts showing immediate upgrades to economic growth, Philip Hammond will nonetheless play down any expectations of large-scale giveaways.
Extra spending will be paid for by additional taxes in what is expected to be a fiscally neutral Budget.
A reform to the tax treatment of the self-employed is expected to raise hundreds of millions of pounds.
The Chancellor will not present his debut red box outside Number 11 with a deluge of extra red ink. He will hold back about £50bn of fiscal space against his watered-down fiscal rules to deal with a possible future deterioration in public finances during the Brexit process.
But Mr Hammond, who has been meeting with Conservative MPs concerned about funding in a variety of public services, faces a key challenge as the impact of years of spending cuts start to be seen publicly.
The long-term focus will also be evident in a series of reviews into thorny public policy issues from social care to business rates.
An extra £1bn to £1.5bn will be found to fund immediate social care pressures. Rolling reviews of three to four years will also be announced on social care and business rates for council funding.
There is some expectation of a change to the way funding formulae for a variety of local services are calculated, including changes to “needs-based” systems.
Faced with the threat of a revolt by Tory MPs, he will also find funds to help firms hit by the sharpest rises in business rates, and he is also looking to overhaul the whole business rates system.
The Chancellor will also announce a new £5m fund in the Budget for women’s equality projects, to mark the upcoming centenary of legislation which gave women the right to vote.
Shadow chancellor John McDonnell told Sky News he expected the Government to do more in the Budget.
He said: “They’re living in a different world. People are suffering at the moment.
“Stagnating wages, prices increasing because of inflation, insecure work, cuts to public services – they’ve got to address those issues.”
Mr Hammond will set out plans for £500m in additional spending on education, with £320m for 140 new free schools – including new grammars promised by Theresa May.
He will say that the Government will invest in young people’s ability to go to a good school, achieve good qualifications and get the right skills “equipping them for the jobs of tomorrow”.