JEREMY Hunt will today insist he can grow the economy and get the country back to work, as he sets out "increased sanctions enforcement" for those on benefits and bigger tax-free pensions for high earners.

The Chancellor will present his spring statement as an optimistic “budget for growth”, following the “difficult decisions” he took last autumn to reassure financial markets alarmed by his predecessor.

He is expected to set out measures to “ease the cost of living, remove barriers into work to boost incomes, drive business investment, and support new, high-growth industries”.

There will also be steps to deliver on the Government’s promise to halve inflation this year, and reduce the UK’s £2.2trillion national debt as a share of GDP in the medium-term.

Among the measures trailed in the media yesterday were a rise in the annual and lifetime allowances for tax-free pensions savings, which will benefit around 2million people.

Critically, they will benefit doctors and consultants who might otherwise leave the NHS because of punitive levies associated with saving above the current allowance limit.

The government is reported to be raising the annual tax-free pension contribution from £40,000 to around £60,000, and the lifetime allowance from £1.07million to around £1.8m.

After years of tepid growth, a Covid-induced recession, and another downturn likely amid high inflation - as well as the unadmitted negative impact of Brexit - the Chancellor is expected to tell MPs: “In the autumn we took difficult decisions to deliver stability and sound money.

"Today, we deliver the next part of our plan: a Budget for growth.

“Not just growth from emerging out of a downturn. But long term, sustainable, healthy growth that pays for our NHS and schools, finds good jobs for young people, provides a safety net for older people - all whilst making our country one of the most prosperous in the world.

“Today I deliver that by removing the obstacles that stop businesses investing; tackling the labour shortages that stop them recruiting; breaking down the barriers that stop people working; and harnessing British ingenuity to make us a science and tech superpower.”

Lower than expected borrowing figures and a recent drop in wholesale energy prices have created leeway for the Treasury on the public finances, but the Chancellor is still likely to proceed cautiously, in contrast to Kwasi Kwarteng’s dash for tax cuts.

At the centre of Mr Hunt's plan are measures to encourage the over-50s, the long-term sick and disabled, and benefits claimants back into work.

The Chancellor is set to announce the axing of the system used to assess eligibility for sickness benefits to let people return to work without losing them in a cliff-edge cut.

Parents receiving universal credit childcare support will get it upfront instead of claiming it, with the amount they can receive increasing by several hundred pounds.

There will also be “increased sanctions enforcement” to spur benefit claimants to move into work or increase their hours.

The Office for National Statistics yesterday reported the number of Britons off work due to long-term sickness was at a record high, at 2.52m in the three months to January.

The biggest number since records began 30 years ago, it was up 2.6 per cent on the previous quarter, and up 7.9% year-on-year.

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “The fact that so many people are too sick to work is having profound consequences for the employment market.

"We know Jeremy Hunt’s Budget will be introducing tougher measures for people who are claiming benefits, and he is considering some changes to encourage more wellness at work.

"However, the elephant in the room is going to be the number of people who are unable to work because they are waiting for NHS treatment.”

Baroness Ros Altmann, a former pensions minister, said: “Focusing on changing pensions and benefits will not solve the health issues keeping over-50s away from work.

“The Chancellor is right to consider whether increasing pension allowances or tightening benefit assessments would result in higher numbers of over-50s re-entering or remaining in the workforce. However, the evidence clearly suggests this will not be sufficient.”

She said some people were “simply not well enough to keep working, especially full-time, due to health problems" and that post-Covid NHS backlogs and reduced services were likely to mean more older people staying in poor health as they waited for treatment.

She said: “This will continue to keep them away from work and, if they have already left a job, will make it far harder to return to the labour force.”

Carl Emmerson, deputy director at the Institute for Fiscal Studies, said the annual and lifetime pension allowances were "badly designed and in need of reform".

He said: "The annual allowance hits those who want to make large but infrequent pension contributions and can provide terrible incentives for high earners that have inflexible, defined benefit arrangements.

“Both have been cut since 2010, raising the exchequer an estimated £8bn a year in additional revenue.

“Increasing them will reduce the damage they do, but even better would be a more thorough reform of how pensions are taxed. High earners with big pension pots do benefit from inappropriately generous tax treatment of pensions, but there are much better ways of restricting this than these crude limits.”

Shadow chancellor Rachel Reeves said the budget was a chance for the government to end years of “managed decline”, but doubted the Tories could deliver it.

“With 13 years of economic mismanagement and sticking plaster politics leaving us lagging behind, what we need to see on Wednesday is some real ambition from the Government.

“Labour’s focus would be on our mission to secure the highest growth in the G7. Our plan will help us lead the pack again, by creating good jobs and productivity growth across every part of our country, so everyone, not just a few feel better off.”

SNP MP Stewart Hosie added: "The number one test for the UK Budget will be whether the Chancellor puts money back into people's pockets - or continues to rip families off by imposing sky-high energy bills and real-terms cuts to public sector pay and benefits.

"Scotland is a wealthy, energy-rich country and families are sick of being fleeced by Westminster. Instead of hammering household incomes, the Chancellor must save families £1,400 by slashing energy bills and deliver a comprehensive package of support.”