The UK Chancellor is expected to increase benefits and avoid welfare reform in the Budget, funding the measures through higher taxes despite pressure over spiralling welfare spending.

Chancellor John Healey will skip welfare reform in today's Budget, setting aside £5.5billion for a 3.5 per cent rise in benefits for ten million people, at least £1billion for winter fuel bill subsidies, and a new bank profits charge, while freezing NHS prescription charges at £9.90 and leaving frozen tax thresholds unchanged.