Kwasi Kwarteng will deliver his emergency mini-budget to bring in winter tax cuts for millions of people and set out more detail on energy support next Friday, according to sources.
Although normal politics has been paralysed by the death of the Queen, the chancellor and his team have been putting the final touches to the budget with the aim of announcing it once the country emerges from national mourning.
However, with Liz Truss expected to be at the UN general assembly in New York next week and the government also planning to set out its priorities for the NHS, there was limited time available for a fiscal event.
In the mini-budget, the government is expected to confirm plans to reverse the recent rise in national insurance, even though it benefits higher earners the most, handing back about £1,800 a year to top earners while the lowest earners get about £7 a year.
Truss has already said she would ditch a planned rise in corporation tax. Her team has also spoken to business groups about changes to business rates and cuts to VAT to help with the energy crisis, as well as a longer-term review of these taxes.
Senior MPs believe Kwarteng could make a “rabbit out of the hat” announcement on the cost of living crisis, with speculation this could include bringing forward by a year the pledge, made by Rishi Sunak as chancellor, to cut income tax by 1% from 2024.
The government is expected to outline further details of Truss’s £100bn-plus emergency bailout to help households with energy bills, following criticism that she hadn’t said how the package would be funded.
Truss had been under pressure from Tory MPs to set out her plans before the Commons broke up for party conferences. It means parliament will sit for an extra day before the Labour conference begins on Saturday in Liverpool, with the recess expected to be cut by one week so that MPs return before the middle of October.