Philip Hammond is set to pump £500million into defence at next week’s Budget after Tory anger erupted over cuts to the military.
Defence Secretary Gavin Williamson has been in a long-running battle with the Treasury for more cash for Britain’s Armed Forces.
Many Tory MPs joined in demands for the Ministry of Defence to be given more money after a report warned it faces a £20billion funding blackhole over the next decade.
The Chancellor will announce the major cash injection when he unveils his Budget in the House of Commons on Monday, sources told The Sun.
He has come under to find the extra money after a major report by the National Audit Office (NAO) warned of the huge shortfall in the MoD’s funding plan.
The report, published in January, said the MoD’s spending plan ‘is not affordable’ and ‘urgent action’ must be taken to plug the gaping hole in the finances.
The Treasury is under huge pressure to turn the spending taps on in next week’s Budget after Theresa May used her party conference speech to vow and end to austerity.
Mr Hammond has to find money to pay for the Government’s commitment to pump an extra £20bn a year into the NHS over the next decade.
While he is also under enormous pressure to find billions more to bail out the under-fire Universal Credit welfare shake-up.
Poor families who lose out in the switch over face losing up to £2,4000 a year according to some analysis.
And a Tory backlash has erupted over the policies – with many MPs breaking ranks to publicly call for more cash.
Sir John Major has warned that the policy could be as unpopular as the poll tax, which sparked nationwide riots and helped topple Margaret Thatcher.
While Ian Duncan Smith – the former Tory leader and architect of the scheme who quit the Cabinet over welfare cuts – has called for another £2bn to be pumped into UC for it to work properly.
Analysis exclusively seen by MailOnline today reveals that 39 Tory MPs – including over a dozen ministers – could lose their seats over the controversial Universal Credit scheme.
Leading Conservatives including Amber Rudd and Iain Duncan Smith – the architect of the welfare shake-up – are on the at risk list.
And ministers including Secretary of State for Wales Alun Cairns, Environment Minister George Eustice and Work and Pensions Minister Alok Sharma could also lose their seats.
Analysis by 38 degrees shows the Tory MPs all have constituencies where the number of universal credit claimants is bigger than their majorities.
But Mr Hammond had some much-needed good news yesterday when new figures showed that wages are finally growing while the proportion of people in low paid jobs has fallen to its lowest level since records began.
The Office for National Statistics (ONS) said that full-time wages are growing at their fastest rate since the 2008 financial meltdown.
While the proportion of low-paid employee jobs by hourly earnings fell to 17.8 per cent – the lowest since the series began in 1997.
While Britain’s finances are in better shape than they have been since the 2008 crash.
Official figures show Government borrowing below £40billion in 2017/18, having peaked at £153billion in 2009.
And it emerged this week that the pressure could have eased on the Chancellor to raise taxes to fund Tory pledges on the NHS and ending austerity.
Reports said that stronger than expected tax receipts mean that the Office for Budget Responsibility’s forecasts for the public finances were set to reduce the deficit for 2018-19 by around £13billion – a massive revision.
That could help the Chancellor avoid unpopular tax increases to pay for Theresa May’s pledge earlier this year to raise an additional £20billion a year for the NHS in England by 2023.
One of the many things that Brexit makes awkward is economic forecasting: the Office for Budget Responsibility has its work cut out there.
Experts at the Institute for Fiscal Studies calculate that just keeping spending on services in line with inflation, while funding generous rises promised for health, defence and aid, would cost the Chancellor £19billion.
There is strong speculation the level of income at which workers pay income tax could be frozen by Mr Hammond next week.
This risks sparking a backlash as a Tory election pledge at the 2017 election that the thresholds would rise to £12,500 by 2020.