Brown to unwrap election year British Budget

LONDON - British finance minister Gordon Brown will unwrap a package of modest sweeteners in his Budget today but will try to avoid criticism that he is handing out an irresponsible pre-election "bribe."

The Chancellor of the Exchequer is expected to announce help for pensioners, first-time house-buyers, working families with children and savers and to extend the freeze on petrol duty.

Labour MPs hope he will do enough to revive what some of them regard as a faltering Labour election campaign.

He faces a difficult balancing act because he does not want a repeat of the headlines about "£2bn of sweeteners" that greeted his pre-Budget report in December.

Treasury sources said last night there would be "no loosening" of the fiscal position he had already set out.

The Chancellor will highlight a "£35bn gap" between Labour and the Tories - the difference between what the two main parties would spend by 2011-12-- as a key dividing factor at the imminent general election.

In a private briefing note to Labour MPs seen by The Independent, Mr Brown previewed his Budget strategy by saying: "The Conservatives are committed to cutting public spending by £35bn, coupled with plans for charges and privatisation in health and education, which would weaken the economy and hit families and pensioners alike...cuts so large that they could be found by cutting deep into frontline public services such as schools, hospitals and the police."

Today the Chancellor will try to head off warnings by independent forecasters that Labour would have to raise taxes if it wins a third term to fill a £10 bn "black hole" in his plans.

He is expected to use part of the higher-than-expected government revenues to cut borrowing and resist the temptation to spend it on pre-election give-aways.

Instead, he will unveil a "Budget for the long term" aimed at equipping Britain for the new challenges posed by China and India.

He will trumpet investment on skills, training, science, technology and design and pledge to give every child a good start in life. He will try to woo businessmen by promising another drive to cut red tape and propose the merger of some regulatory bodies.

Mr Brown pre-empted the Tory attack over tax rises in his letter to MPs. He insisted: "Labour has kept all its promises on tax: we haven't raised the basic or top rates of income tax. Indeed, we've cut the basic rate to 22p, the lowest for 70 years, and we've introduced a 10p starting rate, the lowest for 40 years.

"As a result of Labour's tax and benefit reforms, families with children are on average £1,300 a year better off in real terms since 1997, and the poorest fifth of families with children are £3,000 a year better off."

But the Tories also put tax at the heart of their campaign in an eve-of-Budget skirmish yesterday.

In a document they highlighted what they called Labour's broken promises on tax at the 1997 and 2001 elections and said they would be repeated if the party won a third term.

Michael Howard, the Tory leader, said: "The question is not will Labour raise taxes, but which taxes will they raise?"

He claimed that national insurance, the basic rate of income tax, capital gains tax on homes and VAT on food were all contenders.

Oliver Letwin, the shadow Chancellor, took comfort from yesterday's NOP poll in The Independent, which found that more voters backed the Tory plan to reduce taxes than Labour's policy of higher spending without tax cuts.

He said the survey showed that people were beginning to understand that Britain was spending more than it could afford without resorting to further tax rises.

Labour high-lighted the fall in unemployment in constituencies represented by Mr Howard and his shadow Cabinet.

Alan Milburn, the party's election co-ordinator, said: "Today it is Labour that is the party of the economy. The challenge for this Budget is to lock in stability and prepare Britain for the challenges of the future."

- Independent