Budget 2013: Osborne to help those 'who want to get on'
Budget 2013: George Osborne delivers statement
(about 1 hour later)
George Osborne has said he will "tackle the economy's problems head on" when he outlines his fourth Budget.
Chancellor George Osborne is delivering what he promises will be a Budget to tackle economic problems and help "those who want to work and get on".
In a message ahead of the annual statement, due at 12:30 GMT, the chancellor said he would help "those who want to work hard and get on".
He is expected to delay or cancel a planned fuel duty rise and could scrap above inflation alcohol tax rises.
The government is under pressure after output shrank at the end of 2012 and the UK lost its triple A credit rating.
He has also ordered ministers to find an extra £2.5bn in cuts to fund spending on new infrastructure.
There will be more cuts to fund infrastructure projects but Labour is urging Mr Osborne to "change course".
But any good news could be overshadowed by downgraded growth forecasts and higher borrowing.
However, the government has vowed to stick with its central plan to cut the deficit. Ahead of the Budget, figures showed unemployment had increased for the first time in a year, rising by 7,000 to 2.52 million in the three months to January.
Mr Osborne will resist Labour calls to change economic course despite the threat of a dip back into recession and the loss of the UK's triple A credit rating, insisting the economy is on the right track.
Mr Osborne will start speaking in the House of Commons straight after the half-hour Prime Minister's Questions, which starts at noon.
He is also likely to ignore calls by Lib Dem Business Secretary Vince Cable to borrow more to boost growth with a big building programme.
Among media speculation about likely measures, The Sun said he would scrap next month's 6p rise in the cost of a pint of beer and would abolish the "alcohol duty escalator" where prices for beer, wine, cider and spirits automatically rise by 2% above inflation every year.
Deficit
The Guardian said the chancellor might delay a planned rise in fuel duty due in September while The Times said he planned to offer help to "homebuyers, small businesses and cash-strapped households".
But he will announce £2.5bn of spending on infrastructure paid for by a further squeeze on public spending. Details of where the axe will fall will come in June when the government unveils its spending review.
The Daily Mail says the chancellor will "unlock £4.8bn in child trust funds and allow parents to transfer their investments into more generous junior Isas".
In an attempt to show he is on the side of "hard working voters", he is likely to speed up progress towards a £10,000 tax free personal allowance.
Spending freeze
A rise in petrol tax due for the autumn could be delayed or even scrapped and a 6p alcohol duty rise is likely to be dropped and the annual escalator, where prices rise by 2% above inflation every year, ditched.
In a message on the micro-blogging website Twitter, Mr Osborne said his Budget would "tackle the economy's problems head on" and help "those who want to work hard & get on".
But the price of spirits and strong lagers could go up as the government tries to show it is serious about tackling alcohol abuse despite the minimum alcohol pricing plan looking to have been shelved.
Conservative MPs have called for tax cuts and a spending freeze, while Lib Dem Business Secretary Vince Cable has led calls for an increase in capital spending, to build roads and houses.
The chancellor's financial statement comes against a backdrop of grim economic news, with unemployment climbing by 7,000 to 2.52 million between November and January, according to official figures.
On Tuesday, the chancellor told cabinet colleagues they would have to cut 2% of their departments' spending over the next two years, saving about £2.5bn. This money will be used to fund projects to benefit the economy.
Some economists predict Mr Osborne will be forced to admit that the UK's deficit is rising again and his target for debt to start falling will be pushed back by another year.
Both Prime Minister David Cameron and Mr Osborne have ruled out extra borrowing to fund measures designed to boost growth.
'Failure'
Instead, the additional 2% departmental cuts - which come on top of the 3% spending reductions announced for the next two years in last year's Autumn Statement - will be used to boost capital spending.
Ahead of the speech Labour leader Ed Miliband accused Mr Osborne of presiding over a "failing" economic plan and urged him to change course.
The move, which will see health, schools and overseas aid protected, is made possible by underspending by government departments this year.
"The government is borrowing over £200bn more than he had planned," added Mr Miliband.
As well as additional cuts, Mr Osborne is also expected to set out the "spending envelope" - the total amount of spending available to departments - in the forthcoming Spending Review, which will take place on 26 June.
"Why? Because it's paying for failure, its failure to get growth moving. And it's also making Britain's families pay for that failure."
The BBC's political editor Nick Robinson said the state of the public finances gave the chancellor little room for manoeuvre, while the latest economic forecasts to be announced on Wednesday were likely to be gloomy.
Ahead of the Budget the government announced plans for some parents in the UK to be able to claim back up to £1,200 a year for each child - or 20% of childcare costs - from 2015.
'Straight and competent'
Mr Cameron said the plans, expected to cost £1.4bn, would be a "boost direct to the pockets of hard-working families" but it has been criticised in sections of the press for penalising stay-at-home parents.
After Mr Osborne had to reverse a number of proposed tax changes in the last year's Budget following criticism, Nick Robinson said the chancellor would be determined this year's package "held together" and was regarded as being "straight and competent".
But Labour leader Ed Miliband said the chancellor must be prepared "to change course, not to offer more of the same, because his economic plan is failing".
Mr Osborne is expected to announce government policy on alcohol pricing, following reports the government has ditched plans for a 45p-per-unit minimum alcohol price in England and Wales.
If the beer escalator is scrapped, the chancellor might also feel under pressure to increase taxes on cheap but strong alcoholic drinks, Nick Robinson added.
A boost for housebuilding and an extension of the government's NewBuy scheme, which helps people with small deposits buy newly built homes, may also be included in the Budget.
Simon Hughes, deputy leader of the Liberal Democrats, said supporting construction was the "quickest way" to create jobs, while his party would also like to see further progress towards increasing the threshold at which people start to pay income tax to £10,000.
Inflation target
And there has been speculation the chancellor may look at changing the remit of the Bank of England to help the economy get back to sustained growth. potentially altering the 2% inflation target mandate set for its interest rate-setting Monetary Policy Committee.
Canadian Mark Carney, who takes over as governor in July, has expressed interest in expanding the Bank's role in some way, potentially targeting growth or unemployment alongside its current inflation target.
Ahead of the Budget, the government announced plans for some parents in the UK to be able to claim back up to £1,200 a year for each child - or 20% of childcare costs - from 2015.
Meanwhile, members of the UK's largest civil service union, the Public and Commercial Services Union, are staging a 24-hour strike on Wednesday in a dispute over pay, pensions and working conditions.
Meanwhile, members of the UK's largest civil service union, the Public and Commercial Services Union, are staging a 24-hour strike on Wednesday in a dispute over pay, pensions and working conditions.
Government departments, driving test centres, museums and job centres are among workplaces expected to be hit while a rally will be held at Westminster while Mr Osborne delivers his Budget.
Government departments, driving test centres, museums and job centres are among workplaces expected to be hit while meetings at the Welsh assembly have been rearranged because Labour and Plaid Cymru members will not cross a picket line.
A rally will be held at Westminster while Mr Osborne delivers his Budget.
