Benefits will be cut, says the jobs minister as Rachel Reeves was finalising her Budget of tax rises, spending savings and investment.
With the welfare bill in Britain set to spiral in coming years and decades, the Chancellor was reported to be seeking billions of pounds in benefits savings.
Employment Minister Alison McGovern told Times Radio on Friday: “We will not go ahead with the Tory plan because that was theirs.
“We will need to make savings like all departments but we will bring forward our own reforms.
“The first thing that we need to do is our changes to the support that is offered to people through job centres.”
The reforms include getting job coaches to work more closely with GPs to help people get back into work.
Under Conservative proposals, welfare eligibility would have been tightened so that around 400,000 more people who are signed off long-term would be assessed as needing to prepare for employment by 2028/29, reducing the benefits bill by an estimated £3 billion.
It is expected that Ms Reeves will commit to the plan to save £3 billion over four years, but Work and Pensions Secretary Liz Kendall will decide how the system will be changed in order to achieve this.
A Government spokesperson said: “We have always said that the Work Capability Assessment is not working and needs to be reformed or replaced alongside a proper plan to support disabled people to work.
“We will deliver savings through our own reforms, including genuine support to help disabled people into work.”
Ms Reeves is looking to raise up to £40 billion from tax hikes and spending cuts in the Budget as the Government seeks to avoid a return to austerity.
The Chancellor was expected to raise National Insurance on employers, increase capital gains tax but not to as high as 39 per cent, with mooted reforms to inheritance tax and stamp duty.
The Government has not committed to extending the higher thresholds at which people start paying stamp duty.
The Tories raised the "nil rate" threshold from £125,000 to £250,000, and for firs- time buyers it rose from £300,000 to £450,000.
The Chancellor was also set to loosen her fiscal rules so she can borrow billions more for capital projects in the UK.
But Sir Keir Starmer on Thursday faced a Cabinet backlash over the planned measures, with several ministers writing to the Prime Minister directly to express concern about proposals to reduce their departmental spending by as much as 20 per cent.
Downing Street warned that “not every department will be able to do everything they want to” and “tough decisions” would have to be made.
The Prime Minister’s official spokesman confirmed Sir Keir and Ms Reeves have agreed on the “major measures” of the Budget on October 30, including the “spending envelope” that sets out limits for individual Whitehall departments.
While some spending cuts are all but inevitable, tax rises are expected to form the centrepiece of Ms Reeves’ plans to fill what the Labour Government calls a “black hole” in the public finances left behind by its Tory predecessors.
The Chancellor was on Friday holding talks with City bosses at the first meeting of Labour’s British infrastructure taskforce, as the Government seeks advice on how to boost investment in the UK.
Finance chiefs from HSBC, Lloyds and M&G will be among those involved in the discussions, which the Treasury says will take place regularly.
Ms Reeves said their expertise will be “invaluable in the weeks and months ahead” as the Government pursues its “number one mission to grow the economy and create jobs”.
Chief Secretary to the Treasury Darren Jones said the taskforce would aim to end “the cycle of underinvestment that has plagued our infrastructure systems for over a decade”.
The Tories have accused the new Labour Government of planning to break its election manifesto pledge not to raise VAT, income tax or National Insurance.
Sir Keir has sought to argue that this promise only applied to “working people”.
