John McDonnell, Labour’s Shadow Chancellor is to demand “an emergency budget for our public services”.
He is to lay out five proposals for next week’s budget, including funding to lift public sector pay.
He will also claim that the government is failing to stop tax avoidance, and that it wants to cut corporation taxes in a “race to the bottom”.
In reply, the government said Labour’s plans would lead to more debt, higher taxes, and fewer jobs.
Chancellor Philip Hammond is due to give his budget speech next Wednesday afternoon.
Mr McDonnell, who is due to lay out his proposals in a speech at Church House in Westminster on Thursday, is expected to say that there must be “a genuine and decisive change of course” by the government, and will outline five proposals:
- Pause the roll-out of Universal Credit to fix delays in benefits payments.
- Fund public sector pay rises.
- Put more money into infrastructure such as road and rail projects.
- Increase funding for health, education, and local government.
- Launch a large-scale house-building programme.
Analysis by BBC economics editor Kamal Ahmed:
John McDonnell wants to create a clear red line between him and the present incumbent of Number 11, Philip Hammond.
A week ahead of the Budget, the shadow chancellor has said that more should be spent on health, education and housing and that the public sector pay cap of 1% should be lifted.
The controversial introduction of the new benefits system – the universal credit – should also be delayed after evidence that some recipients were being left without payments for several weeks.
To pay for the new policies, Mr McDonnell will say he is willing to borrow far more, arguing it is a good time to do so as interest rates are at historic lows.
It is a position rejected by the Conservatives, with Mr Hammond saying that more borrowing now simply means more debts to be repaid in the future.
It is expected that he will focus any new spending on health and housing in that Budget, next Wednesday.
Mr McDonnell is expected to say that there had to be a complete break with what he called “past failures.”
He will say: “The Tories have created an economy in which the rich elite at the top do better than ever, while the rest of us have to live with our vital public services teetering on the brink.
“Philip Hammond wants you to believe there is nothing that can be done to end these scandals.
“He wants to pretend he cannot invest on the scale needed, yet he has already borrowed more in his first year as Chancellor than any of his predecessors in their first year at the Treasury.”
Responding to Mr McDonnell’s proposals, Steve Barclay, economic secretary to the Treasury, defended the government’s record, saying: “We have turned our economy around by taking a balanced approach to public spending and backing businesses to create better, higher-paid jobs.
“Labour always take it too far and we know what that means from last time – more debt, higher taxes, fewer jobs – and ordinary working people paying the price.”