Rishi Sunak is due to raise the minimum wage when he presents his budget on Wednesday with an eye on the next election.
The minimum wage, currently worth £8.91 per hour, could go up to £9.45, according to reports.
The Chancellor is looking for headline figures of £10 an hour for the so-called National Living Wage by the next General Election due in 2024 as the wage rise automatically increases with the cost of living.
But opposition politicians and poverty campaigners have warned that rises in inflation, the cut to Universal Credit and a massive fuel increase cost will wipe out any increase.
Care workers in Scotland are already calling for the proposed National Care Service to pay all care workers £15 an hour to help attract more people to the profession and retain the overworked staff.
There is a huge shortage of care workers and with shelf stacking in supermarkets paying more per hour, attracting people to what can be an extremely stressful and demanding job is proving difficult.
Many private firms are already offering more than the minimum wage to attract new workers in the face of staff shortages.
Labour has called for a six month reduction in VAT on home energy costs to help low earners who have faced a £20-a-week cut in Universal Credit.
Shadow Chancellor Rachel Reeves said: “The Chancellor can choose to let online giants dodge tax, and ignore the cost of living crisis – or he can give working people a helping hand by providing an immediate cut to their energy bills.”
According to poverty researchers at the Joseph Rowntree Foundation 3.8 million low income families are unable to keep up with household bills with 1.4 million behind with council tax and 950,000 in rent arrears.
The dire figures could encourage the Chancellor to reduce the Universal Credit taper rate, the amount which claimants lose from every extra pound they earn, from 63p to 60p.
Sunak will also pump £560 million into training adults to improve their maths in a bid to fill one million job vacancies.
But Jane Gratton of the British Chambers of Commerce said: “More needs to be done to close the skills gap and improving numeracy sits at the very heart of that.”
Meanwhile Bank of England Governor Andrew Bailey is warning of interest rate hikes making mortgages more expensive for home owners.
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