Gordon Brown will next week give a clear signal that he would press ahead with controversial welfare reforms as prime minister, giving his full backing to a bigger role for the private sector in getting up to 3.5m benefit claimants back into work.

In the first real indication of how he intends to overhaul the public sector if he takes over from Tony Blair later this year, the chancellor will join forces on Monday with John Hutton, work and pensions secretary, to unveil a far-reaching review of welfare-to-work policy by David Freud, a former investment banker.