George Osborne has played down the prospect of significant tax cuts or extra spending commitments in his Autumn Statement this week as he promised to deliver a "responsible recovery".
The Chancellor insisted the coalition would keep the public finances under tight control, saying moves to cut energy bills and give home buyers £1,000 grants for insulation would be fully funded through a crackdown on tax dodgers.
The comments, in an interview with the BBC’s Andrew Marr Show, came as ministers made a concerted bid to blunt the Labour attack on cost of living.
The coalition has been on the back foot over energy bills ever since Ed Miliband pledged to freeze prices for 20 months if he wins in 2015, with public fury greeting news that suppliers were hiking prices by up to 10%.
Signs of a sharp upturn in growth have led to speculation that Mr Osborne could have room to ease the pressure on families after years of austerity.
But although he is expected to curb business rates and target other help at small firms, the Tory MP stressed he was still having to take “difficult decisions”.
“In the Autumn Statement I will say the job is not yet done because we have got to make sure we go on taking the difficult decisions to secure the recovery,” he said.
“We also want a responsible recovery. We want to learn from the mistakes of the past and not see a re-emergence of those problems in the financial system that brought this country to its knees.”
The changes to environmental levies will see the cost of the Energy Company Obligation (ECO) scheme halved by giving the “Big Six” power firms two years longer to hit targets.
Other policy charges will be funded from general taxation in future. EDF has welcomed the move and indicated that it is not likely to increase prices again before 2015, with other firms expected to follow suit.
To ensure carbon emissions do not rise as a result of the deal, anyone buying a home will be eligible for the £1,000 grant for energy efficiency measures, such as installing insulation or replacing the boiler. The sum could be even higher if the property needs a lot of work.
Mr Osborne dismissed the idea that energy companies will pocket the reduction in government levies without bringing down bills.