George Osborne is expected to use his Budget to announce a £6billion boost to the country’s finances . George Osborne is expected to use his Budget to announce a £6billion boost to the country’s finances that will be used to fund tax cuts for the middle classes. Economists believe ‘a cocktail of good news’ including falling inflation will cut the borrowing bill by about £20billion. The EY Item Club, which compiles its forecasts using the Treasury’s economic model, said it expected the Office for Budget Responsibility to reduce the borrowing forecast for next year by £6billion. It was also claimed last night that owners of homes worth up to £1million will be able to pass them on to their children tax-free under plans drawn up by the Chancellor. Mr Osborne’s proposal is expected to become a key part of the Tory manifesto, but it will not be included in tomorrow’s Budget after it was blocked by the Lib Dems. Plans to raise the inheritance tax threshold to £1million were included in the party’s manifesto at the last election, but were vetoed as part of the Coalition deal. According to Treasury papers leaked to The Guardian, the proposed measures would also reduce the inheritance tax bill on properties worth up to £2million by £140,000. The tax break, which would mean around 20,000 fewer estates every year would have any inheritance liability, is expected to cost nearly £1billion. Scroll down for video . In the papers, the officials note that the move ‘will generally be very popular with the public and in the media’. The document, prepared for Treasury financial secretary David Gauke, added: ‘You have indicated a desire to reduce the burden of inheritance tax. ‘Having considered the cost of a substantial increase in the existing nil rate band you and the Chancellor have indicated you would like instead to introduce a more targeted measure to allow the family home to be passed onto the children of deceased without it leading to an inheritance tax liability. It is thought the Lib Dems leaked the papers ahead of the Budget in a bid to paint to Tories as the party of the rich . ‘This reflects the concern raised by the public about rising house prices increasingly leading to estates with a modest house ... paying inheritance tax.’ A senior Tory source blamed the leak of ‘old advice’ on the Liberal Democrats, adding: ‘They are desperate. There is nothing in the Budget on inheritance tax, which we have said repeatedly is an election issue.’ It is thought the Lib Dems leaked the papers ahead of the Budget in a bid to paint to Tories as the party of the rich. The Government is set to announce the biggest real-terms increase in the minimum wage since the financial crisis. The standard rate will rise 3 per cent from October to £6.70 an hour, benefiting 1.4million, while the rate for apprentices will go up by a fifth, to £3.30. The changes, to be announced in the Budget, come amid the strongest economic growth for seven years and the lowest inflation for more than a decade.
The EY Item Club predicts next year's borrowing forecast  will be £6bn less . George Osborne expected to use the money to pay for range of tax cuts . Homes worth up to £1m will be able to be inherited tax free, say insiders . Proposal is expected to become key part of the Tory manifesto for election . Will not be included in tomorrow's Budget after being blocked by Lib Dems .