Darling defends 'bad news Budget'

Drinkers and drivers were hit hardest in Wednesday's package as he clobbered "gas-guzzling" cars and hiked duty on booze. Shadow chancellor George Osborne branded it a "bad news Budget" which "kicked Britain's families when they're down".

"The cost of living is already rising fast and the Government has added to it with stealth taxes on cars and alcohol, when we believe that these kinds of taxes should be offset with tax reductions elsewhere," he said.

But Mr Darling dismissed this assessment, saying: "We are trying to help people who are facing difficulties at the moment," he told BBC1's Breakfast News. He also defended the new "showroom tax" for bigger cars, saying the measure would enable people to make "better choices" when buying new cars. "I'm also trying in the longer term ... to take steps now to deal with problems we know we are going to face in the future," he said.

Mr Darling has been accused by some political opponents and economic experts of being over-optimistic in his assessment of the UK's prospects as the world faces troubled economic times. But he insisted his latest forecasts were "broadly in line" with independent predictions. And he reiterated his claim that thanks to low unemployment and inflation, the UK was well placed to face any economic storm.

Mr Darling slashed growth forecasts on Wednesday and admitted that public borrowing would soar to £43 billion to support the economy through the expected slowdown. But he insisted he could still meet the tax and spending rules set by Gordon Brown when he was chancellor - although his figures depend on a strong economic bounce-back in 2009.

The independent Institute for Fiscal Studies said Mr Darling had delivered his package "with fingers crossed".

The need to keep the economy moving as consumer demand slows meant that motorists were at least spared the planned 2p increase in fuel duty, due on April 1, which has now been put back to the autumn. However, the announcement - apparently the result of a last minute climbdown in the face of lobbying by business and motoring organisations - infuriated environmentalists who had been promised the "greenest" Budget on record.

With severely-limited room to manoeuvre, the Chancellor offered some cheer to Labour MPs by offering a £950 million-a-year package of benefit changes to take 250,000 more children out of poverty. There was also a one-off increase in the winter fuel allowance for pensioners, rising from £200 to £250 for the over 60s and from £300 to £400 for the over 80s.

Drinkers, however, will feel the pain of a hike in alcohol duties of 6% above inflation from midnight on Sunday - putting 4p on a pint of beer, 3p on a litre of cider, 14p on a bottle of wine and 55p on a bottle of spirits. The rate will continue to rise by 2% above inflation in future years. The other "sin tax" - tobacco duty - will also go up with an extra 11p on a packet of 20 cigarettes and 4p on five cigars.