Gordon Brown is preparing to deliver his eleventh Budget, which is thought likely to be his last as chancellor.
Gordon Brown has begun delivering his eleventh Budget speech in the Commons - expected to be his last as chancellor.
Mr Brown, the favourite to succeed Tony Blair as prime minister this year, is expected to pledge an extra £1bn to fight child poverty.
He will focus on the environment and education - setting out the key themes of his premiership should he succeed Tony Blair later this year.
His speech, from 1230 GMT, is expected to set out education spending plans - and will be watched for any changes to business taxes and stamp duty on homes.
There have been reports he may unveil changes to personal and corporation tax and pledge £1bn to fight child poverty.
The Tories said Britain had become "much more over-taxed" under Mr Brown.
He will seek to regain the initiative after a senior civil servant accused him of "Stalinist ruthlessness".
Car duties
Mr Brown was reported to be "incandescent" with rage after the criticism from former head of the civil service, Lord Turnbull on Tuesday.
Mr Brown said: "This will be a reforming Budget which will show that - with a platform of continued stability and growth - the government can support families, pensioners and business, encourage work and savings and protect the environment and increase investment in schools and other frontline services."
There have been reports the chancellor might unveil plans for tax breaks for homes which use solar panels and wind turbines and a rise in road tax for the worst "gas guzzlers".
The Budget comes after a week which has also seen an increase in inflation and poor opinion polls for Labour.
Some reports suggest that the duty on the least fuel-efficient cars will double to about £400 a year.
There is speculation he will unveil a cut in business taxes and unveil extra help for pensioners to pay council tax bills.
But education is likely to be the main winner, with extra cash to help fulfil Mr Brown's ambition of closing the gap on spending per pupil between state and private schools.
BBC political editor Nick Robinson said Mr Brown would not want his last Budget "to go with a whimper".
According to The Guardian, Mr Brown will also unveil an extra £1bn in tax credits to alleviate child poverty.
Business groups have urged him not to introduce more company taxes. But consultants Ernst & Young believe he is unlikely to introduce any business tax cuts, despite calls from groups such as the CBI.
There could also be tax breaks for homes which use solar panels and wind turbines and a doubling of road tax to £400 a year for the most polluting vehicles.
The chancellor may tighten the rules on inheritance tax and with property prices continuing to rise, he may act on the issue of stamp duty - currently charged on properties priced above £125,000.
He has already doubled air passenger duty on flights, but was criticised for bringing it in on 1 February, which annoyed some passengers who had booked flights before it was raised.
The chancellor may also tighten the rules on inheritance tax and with property prices continuing to rise and act on the issue of stamp duty - currently charged on properties priced above £125,000.
Shadow chancellor George Osborne told BBC One's Breakfast: "The overall impact for people is that they are much more over-taxed than when Gordon Brown entered the Treasury. That's just a fact.
It is expected to be the chancellor's final budget - if he takes over from Tony Blair, as expected, within the next few months.
"He has been in charge over the last decade and has been responsible for the problems we seen in our society, in our health service and in our education system."
Mr Blair has said he will step down by September, and is expected to announce his resignation shortly after the Scottish and Welsh elections on 3 May.
In last year's Budget Mr Brown promised to raise spending per head on state school children to levels enjoyed by private school pupils.
Council tax
He has already pledged a £36bn boost for schools and colleges in the upcoming three-year spending review, to be announced later this year, but may announce further details on Wednesday.
Mr Blair has said he will step down by September, and is expected to announce his resignation shortly after the Scottish and Welsh elections on 3 May - and Mr Brown is overwhelming favourite to succeed him.
Only two other candidates - Michael Meacher and John McDonnell - have declared their intention to stand against Mr Brown, but they each need the signatures of 44 other Labour MPs to do so.
On Tuesday, Labour's ruling National Executive Committee confirmed Mr Brown would not have to go through an "affirmation ballot" if he was the only candidate.
But he would be expected to attend hustings around the UK.
HAVE YOUR SAY Whatever happens, one thing will be the same: The UK is becoming far too expensive to live in. Ali, Machynlleth Send us your comments
Meanwhile senior ministers and deputy leadership hopefuls rallied around Mr Brown on Tuesday, following the publication of a Financial Times interview with the former head of the civil service, who accused the chancellor of "Stalinist ruthlessness".
Lord Turnbull, who was also Mr Brown's permanent secretary at the Treasury for four years, said of his discussions with Cabinet colleagues: "His view is that it is just not worth it and 'they will get what I decide'."
Education Secretary Alan Johnson defended Mr Brown, saying: "Sure, he's strong minded, he knows his own mind, he's dedicated. He knows what he wants.
"If you can't hack it with someone like that, if your arguments aren't good enough, then that's your problem, not his."
