George Osborne is to set out his tax and spending plans in
the Budget later - his last before the election.
The chancellor has pledged "no giveaways" or
"gimmicks" in his speech, which will be delivered at 12:30 GMT.
Lower-than-expected inflation has generated a £6bn windfall
through lower interest payments and a reduction in the annual up-rating of
welfare.
Labour said the Conservatives were planning "more
extreme spending cuts" after the general election.
Alongside expected pension reforms, Mr Osborne is likely to
scrap the annual paper tax return, in favour of a drive towards digital
records, and further increase the personal income tax allowance.
"He will try to use the Budget to end the deadlock in
the opinion polls and give the Conservatives the political momentum they need
to win another term.
"The chancellor will do that by trying to show voters
the recovery is being felt by everyone across the country.
Ministers have been arriving at Downing Street for a Cabinet
meeting ahead of Mr Osborne's statement, which follows immediately after Prime
Minister's Questions in the Commons.
The chancellor is expected to say: "The critical choice
facing the country now is this: do we return to the chaos of the past? Or do we
say to the British people, let's work through the plan that is delivering for
you?
Today we make that critical choice: we choose the future. We
have a plan that is working - and this is a Budget that works for you."
His Budget statement comes against a backdrop of a
strengthening economic recovery, with a rosier fiscal picture expected as a
result of falling oil prices dragging down inflation.
Mr Osborne will announce the independent Office for
Budgetary Responsibility's latest UK economic growth and borrowing forecasts
for the coming years.
It is expected the OBR will report an improved growth
forecast and revise down its borrowing figures, meaning the chancellor could
have up to £6bn extra to play with.
Experts say this would provide Mr Osborne with some leeway
for pre-election sweeteners.
Or he could decide to ease up on planned spending cuts to
counter Labour claims that the Conservatives want to cut public spending to
levels not seen since the 1930s.
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