Alistair Darling rules out giveaway Budget to focus on deficit

Paul Waugh, Deputy Political Editor
15 Feb 2010

Chancellor Alistair Darling today signalled he would not use the Budget for pre-election “giveaways” as he vowed to use any new cash on cutting Britain's deficit.

In a rebuff to pressure from Gordon Brown, Mr Darling said he would “go further” in slashing the £178billion public debt if there were better than expected unemployment figures or economic growth.

The Prime Minister has been pushing for any windfall to be directed towards fresh spending that could deepen the political “dividing lines” with the Tories, Labour MPs have claimed. But Mr Darling wants to stand firm in focusing on the deficit.

The Chancellor also rejected calls from 20 leading economists for him to start cutting spending in 2010/11 as advocated by the Conservatives.

In plans set out in the pre-Budget report last year, he aims to cut the deficit in half over four years, but will wait until 2011/12 to start on deep cuts.

He told Radio 4's Today programme: “My view and my judgment is that halving the deficit over four year period, the structural deficit coming down by two thirds, is the right [course].”

Crucially, he then added: “If the forecasts turn out to be better than I think at the moment, then of course we can go further.”

Mr Darling said that “getting the deficit down is not negotiable”, adding: “Gordon and I are at one that the priority at the Budget will be to ensure that we do everything we can to get growth, which brings jobs, which brings opportunity.”

The Treasury and No10 reject reports of rows over the Budget, with one insider claiming that relations were “markedly improved” when compared to the run-up to the pre-Budget report.

But allies of Mr Darling were irritated when Mr Brown told the Financial Times last week that the Chancellor may be able to increase spending in some areas if debt interest and benefit spending were lower than expected because unemployment was not as high as forecast.

“Alistair's immediate priority is to maintain the stability of the economy,” one aide said.
The 20 economists warned yesterday that there was a risk of a loss of investor confidence in the UK if the Treasury could not get its deficit down quicker than under Treasury plans.#

Today, Mr Darling said that the economists had themselves conceded that timing of deficit-cutting measures should be “sensitive to developments in the economy”. If the recovery stalled, then more spending could be needed, he hinted.

The Chancellor added that growth in Germany was flat and was contracting in Italy and Spain, a clear warning that the UK too could fall back into recession if it choked off the recovery this year.