Philip Hammond is preparing to present a Budget for the last time before the UK leaves the EU.
The chancellor has said a change of approach – and a new Budget – would be needed if the UK and the EU cannot agree a Brexit deal.
He has also hinted at money for the universal credit welfare reform, with MPs demanding extra investment.
Labour is calling for a halt to the expansion of universal credit and “failed austerity”.
Earlier this month Prime Minister Theresa May promised an end to the cuts made to public spending since 2010 – and Mr Hammond will be under pressure to spell out how that will work.
The Budget, which will be delivered at 15:30 GMT, is the government’s annual announcement about how it will impose taxes and spend public money – and what state the nation’s finances are in.
Most of it is kept under wraps until the chancellor presents it to MPs, but some things have been announced ahead of the speech, including:
- An increase in spending on mental health services in England by at least £2bn a year
- A £30bn package for England’s roads, including repairs to motorways and potholes
- £900m in business rates relief for small businesses and £650m to rejuvenate high streets
- £60m on planting trees in England
- Another freeze in fuel duty
Speaking to the BBC on Sunday, Mr Hammond said the public finances were “performing well” but that detailed information on the government’s austerity pledge would have to wait for next year’s spending review.
It will take place after the UK’s scheduled departure from the EU on 29 March 2019.
If the UK gets a good deal from the EU, he said, “we will be able to show the British people that the fruits of their hard work are now at last in sight”.
The two sides have not yet reached agreement, and both the UK and the EU are making contingency plans for what happens if there is no deal.
Mr Hammond told Sky News that in this scenario: “We would need to look at a different strategy and frankly we’d need to have a new Budget that set out a different strategy for the future.”
He said the government had a “fiscal buffer” to provide protection for the economy if needed.
Monday’s Budget will be based on the assumption of an “average-type free trade deal” being agreed between the two sides, he added.
Cash for universal credit?
The chancellor has been under growing pressure – including from some Tory MPs – to provide more money to protect people losing out from the switch to universal credit, which merges six working-age benefits.
Asked about this, Mr Hammond told the BBC “judge me by my record” – saying he had committed extra money to the scheme in each of his previous two major financial statements.
“When we see things that need addressing, we address them,” he said.
Labour said the entire Budget should be voted down unless the government agrees to halt the roll-out of universal credit.
“The callous complacency of the chancellor who has refused to make good on the Tories’ promise to end austerity is shocking,” added shadow chancellor John McDonnell.
“Nothing less than an end to failed austerity in tomorrow’s budget will be acceptable.”
Mental health investment
The £2bn mental health pledge is included in a £20bn boost to the NHS announced by the government in June.
The current annual mental health spend is about £12bn.
The new funds will go towards ensuring round-the-clock mental health support in major A&E centres and providing more mental health ambulances.
People calling the non-urgent 111 number will be directed to the right support thanks to the investment, the government promised.
Labour responded: “If this announcement is simply money that’s already been promised, it will do little to relieve the severe pressures on mental health services that have built up because of this Tory government’s relentless underfunding of the NHS.”