Robert Peston
Economics editor

If George Osborne has a big idea, it is to transfer the costs of and responsibility for building a better, fairer Britain from the public sector to the private sector.

Perhaps the best way of seeing Osborne's British vision is: slash tax credits by forcing the cost of providing decent wages on businesses; reduce housing benefit, by spurring a boom in cheap housing, cutting rents and stimulating private ownership,

It is a shrinking of the state, that - in theory, and over the medium term - should not impoverish the working poor.

But there may well be pain for what MPs perhaps patronisingly call "strivers" in the period of transition.

Read more from Robert's blog.

Image source, PA

Costing £25bn a year, housing benefit, is one of the biggest and fastest growing parts of the welfare bill.

Why does it cost so much? For answers see this BBC feature.

BBC Radio 5 Live

The chancellor will perform a "tactical retreat" on tax credits later today says 5 Live's chief political correspondent John Pienaar.

The cuts will be softened he says. 

However there will still be "deep cuts" in welfare - possibly housing benefit he says. 

A former adviser to Work and Pensions Secretary Iain Duncan Smith has suggested that the money lost by the rejection of cuts to tax credits could simply be removed from George Osborne’s surplus target.

The House of Lords’ rejection of tax credit cuts means the Chancellor has a £4bn shortfall in his target to reach a £10bn surplus by 2020.

Baroness Stroud, now executive director of Centre for Social Justice think tank, told the Today programme Mr Osborne needed to “just pause and think. Do you actually need to make this change?”

“The most important thing to protect is work incentive,” she said.

Today Programme
BBC Radio 4

BBC economics editor Robert Peston tells Today there is a good chance that the chancellor could soften his surplus target. Mr Osborne has set himself a target of achieving a government surplus of £10bn by 2020. But he needs only to achieve a surplus of 1p to still meet his target.

Mr Osborne may phase in cuts to tax credits over the life of this parliament and could still achieve a surplus of £4bn by 2020, Robert adds.

The chancellor should still have eliminated the deficit  - just - by 2020, Robert says.

George Osborne held his first Spending Review in 2010 and his second, which covered 2015/16, came in 2013. 

The BBC's Brian Wheeler has taken a look at the departments in Mr Osborne's sights as he delivers his latest review later today.  

The graphic below shows where the cuts have fallen since 2010:

George Osborne's spending review challenge is about ring-fencing, squeezes, choices, chopping and national grants on the block.

Today Programme
BBC Radio 4

BBC political editor Laura Kuenssberg tells Today that families in the £19,000 to £20,0000 income bracket can expect to lose around £300 a year under revised plans to make cuts to tax credits. 

That compares with the £1,300 they were originally expected to lose under the chancellor’s original reforms to tax credits.

There has been speculation Mr Osborne may make cuts to housing benefit in order to meet his budget surplus aim, she says.

There has also been speculation he may soften his surplus target.

BBC Radio 5 Live

Two different departments look after education for the over 16s. The Department for Education looks after schools and the Department for Business Innovation and Skills looks after other colleges and training.  

Speculation is rife that the future funding of Further Education (FE) and Sixth Form Colleges in England (which both fall under the unprotected Department for Business) could be cut under the government's spending review.

Economist Vicky Price says it's "very important" to have the kind of education that FE colleges provide, which is often vocational or "catching up" education in numeracy and literacy.

The Chancellor George Osborne's Autumn Statement and Spending Review will be set out on Wednesday. What are his options as he attempts to balance the books?

Today Programme
BBC Radio 4

Image source, Getty Images

Paul Johnson of the Institute of Fiscal Studies tells Today there is no reason to expect the economic forecasts to be any worse than they were in July.

The inflation forecast may have come down a bit so we may have to spend a little bit less on debt interest than previously forecast.

But the chancellor will need to make some “very substantial cuts” to a range of government departments in order to meet his self-imposed target to achieve a surplus in 2019. 

That target is “fixed and inflexible” says Mr Johnson. So, if it turns out that the economy does even a little bit worse than was expected it will be close to impossible to meet that target unless Mr Osborne puts some tax increases in place.

Today Programme
BBC Radio 4

Chancellor George Osborne wanted big cuts in the Home Office budget as part of this year’s Spending Review. It is expected that the Home Office budget will be cut by as much as 20%.

Paddy Tipping, Police and Crime Commissioner for Nottinghamshire, says police numbers would have to be reduced quite dramatically if the cuts are made. The number of police officers has already been cut by 18,000 since the last Spending Review in 2010, he adds.

Cuts to the Home Office budget of another 20% would imply a further reduction in police staffing numbers of 18,000.

Nottinghamshire had 2,400 police officers at its height, says Mr Tipping. At the moment there are slightly less than 2,000 officers in the whole county. If there are 20% cuts the number of officers will be reduced again to around 1,600 by 2020.

Today Programme
BBC Radio 4

Today Programme
BBC Radio 4

"Within government, they are of the view that tax credits are an intellectual nonsense,” BBC assistant political editor Norman Smith tells Today. “Ministers don’t see the point of taking money from people in tax and giving it back to them in benefits.”

George Osborne may give people some money back in tax credits but the danger is that the Chancellor will take it back in housing benefit. And a lot of people in receipt of housing benefit are also in work, Norman adds.

The Daily Politics

Today Programme
BBC Radio 4

Much of what the chancellor does in today’s Autumn Statement “will hinge on… how far he can reignite his party’s aspirations to be the party of working people,” BBC assistant political editor, Norman Smith, tells Today.

Those aspirations were “profoundly damaged” by his attempts to reduce working tax credits, Norman says.

Key to those aspirations will be Mr Osborne’s house building programme which he is expected to announce later. 

These are homes to buy rather than rent, and the chancellor is relying on the private sector to build most of these homes, Norman points out.