Expectations are growing that Jeremy Hunt will unveil tax cuts on Wednesday, with an autumn statement also including welfare reforms aimed at pushing benefit claimants back into the workplace.
It comes after Rishi Sunak used a speech on Monday to promise tax cuts and pledged to “reward hard work” in what appeared to be a clear signal of intent ahead of the autumn statement.
Mr Hunt will use his speech to MPs to implement this rhetoric, with the chancellor expected to announce a revamp of benefits that would see those with mental health or mobility problems seek work that is possible from home .
According to the Times, people could see their benefits cut by £4,680 a year from 2025 as part of a major tightening of welfare rules.
The Department for Work and Pensions held a consultation on the proposals in September and would be the latest attempt by the government to put hundreds of thousands of people back into work.
The potential move comes as Tory MPs look to the prospect of tax cuts, as a result of improved forecasts for public finances and a significant fall in inflation in recent months.
The exact nature of any tax cut remains a matter of speculation, but changes to income tax or national insurance are said to have been considered.
But Mr Sunak also offered a note of caution, warning that the UK's historically high tax burden will be reduced “in a serious, responsible way, based on fiscal rules to deliver sound money”.
“We can't do everything at once,” he said.
Bank of England governor Andrew Bailey voiced his own warning about the state of the economy on Monday, saying it was “too early” to say inflation has been hit.
While Mr Sunak has delivered on his own pledge to halve inflation by 2023, the CPI rate is still well above the Bank of England's 2% target.
Elsewhere, the BBC reported that Mr Hunt is ready to scrap VAT on reusable period underwear, a move long called for by campaigners. Universities will also receive a £20m investment to help them ‘modernise' research into commercial enterprises.
The government will spend more than £300m to unlock £50bn of UK pension funds, the Treasury has already confirmed.
Shadow chancellor Rachel Reeves told Labor MPs on Monday night there was nothing Mr Hunt could do to “distract” attention from the Conservatives' failings on the economy.
Addressing the parliamentary party, she said: “After 13 years, the Conservatives have already failed the economy. Taxes are higher, debt is higher, mortgages are higher and prices are still going up in stores. The economy is not working.
“Nothing the Chancellor does this week will change that or distract from their appalling record.”