This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.

You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/uk_politics/8407318.stm

The article has changed 5 times. There is an RSS feed of changes available.

Version 3 Version 4
Treasury 'had urged tougher cuts' Brown denies over-ruling Darling
(about 3 hours later)
The Treasury wanted tougher action in the pre-Budget report to tackle the UK deficit but was persuaded otherwise by Gordon Brown, the BBC has learned. Prime Minister Gordon Brown has denied over-ruling Chancellor Alistair Darling on how tough the pre-Budget report (PBR) should be on spending.
Treasury officials wanted to announce more spending cuts in order to lend credibility to their plan to halve the £178bn deficit within four years. The BBC understands the Treasury had wanted a tougher approach to public spending in order to lend credibility to its plan to cut the deficit.
However, months before an election, the prime minister wanted existing pledges to boost spending by £30bn maintained. Mr Brown said it was "completely wrong" to suggest he over-ruled Mr Darling.
The Tories have said the plans were "designed for electioneering purposes". He said the PBR was both a plan for deficit reduction and for getting resources to front-line services.
The prime minister told a news conference in Brussels: "Alistair Darling and I have worked together for many, many years, and we worked closely together and continue to do so."
Downing Street said Mr Brown and Mr Darling "see eye-to-eye" on the PBR, and the need to protect frontline services such as schools, the NHS and Sure Start, and international development.
A spokeswoman refused to say whether the Treasury had resisted the real terms increase in the schools budget.
Deficit promise
The government is compelled to halve the post-war record deficit within four years, under the Fiscal Responsibility Bill.The government is compelled to halve the post-war record deficit within four years, under the Fiscal Responsibility Bill.
Wednesday's pre-Budget report (PBR) announced belt-tightening measures including a public sector pay cap and a rise in National Insurance, but both of these come in from 2011. The pre-Budget report actually increased the spending plans the chancellor had previously set out in his Budget, despite the fact that Britain faces the worst peacetime deficit in its history BBC Political Editor Nick Robinson class="" href="http://www.bbc.co.uk/blogs/nickrobinson/">Read Nick's thoughts in full
'Tougher package' Wednesday's PBR announced belt-tightening measures including a public sector pay cap and a rise in National Insurance, but both of these come in from 2011.
Chancellor Alistair Darling is broadly sticking to existing plans for next year, with public spending set to increase by £31bn. BBC Political Editor Nick Robinson said the disagreement between the Treasury and No 10 was not about the speed at which the budget deficit should be reduced, or Alistair Darling "siding with the Conservatives" in arguing for the deficit to be cut sooner and faster.
The disagreement between the Treasury and No 10 was not about the speed at which the budget deficit should be reduced, the BBC understands, but about how to ensure the government appeared to have a convincing plan to cut the deficit. It was, instead, about how to ensure that the government appeared to have a credible and convincing plan to achieve its stated objective of cutting the deficit in four years.
Because they are not discussing priorities openly a great deal of damage is being done Vince Cable, Lib Dem Treasury spokesman class="" href="http://www.bbc.co.uk/blogs/thereporters/stephanieflanders/">Stephanomics: Figures unspun class="" href="http://www.bbc.co.uk/blogs/nickrobinson/">Nick Robinson on the IFS report Mr Robinson said: "The pre-Budget report actually increased the spending plans the chancellor had previously set out in his Budget, despite the fact that Britain faces the worst peacetime deficit in its history.
BBC political editor Nick Robinson said: "The Treasury wanted a tougher package, mindful as it was of the need to start restoring the finances - and to be seen to be doing so. "One reason for this is an aggressive public and private campaign by [Schools Secretary] Ed Balls for a real-terms increase in school spending.
"But, with an election just months away, Ed Balls, the schools secretary, and Gordon Brown, his close ally, argued passionately for an increase in the schools budget - a concession some in the Treasury regret. "He wanted to create a political 'dividing line' with the Conservatives, who have promised to increase spending on health in real terms but have made no similar pledge about education.
"That has had an effect in the real world, with uncertainty over the government's plans persuading investors to shy away from gilts - the bonds which the government sell to raise money." "The prime minister sided with the man who was his Treasury adviser during his long period as chancellor. Although Mr Balls didn't get as much as he wanted, he did get agreement for a 0.7% increase in school spending."
Thursday saw one of the biggest sell-offs of British gilts this year, as investors fretted about the long-term outlook for the UK public finances. 'Issue ducked'
The Treasury has denied a report in the Guardian newspaper suggesting that No 10 blocked a plan to impose a VAT rise above 17.5%, saying that was never an option.The Treasury has denied a report in the Guardian newspaper suggesting that No 10 blocked a plan to impose a VAT rise above 17.5%, saying that was never an option.
Missing cuts? The Conservatives claim the Treasury privately backed their calls for a "more credible plan" to reduce the deficit to gain credibility with the markets, amid fears of a run on the pound leading to increases in interest rates.
Experts have warned that not all the cuts needed to reduce the deficit have been outlined by the chancellor. Shadow chief secretary to the Treasury Philip Hammond told the BBC News channel: "The chancellor had the opportunity on Wednesday to set out clear future departmental spending plans showing where the reductions in public spending would come, so that people could see that he was really serious about this."
But he said Mr Darling "ducked the issue and went along with the prime minister's proposals simply to try and create some political dividing lines rather than doing things the British economy needed done in order to support the recovery".
Thursday saw one of the biggest sell-offs of gilts - the bonds the government sells to raise money - as investors fretted about the long-term outlook for the UK's public finances.
It came as leading economists warned that not all the cuts needed to reduce the deficit had been outlined by the chancellor.
The Institute for Fiscal Studies (IFS) says public spending is facing a £36bn squeeze from 2011 - with £15bn of the cuts needed yet to be identified.The Institute for Fiscal Studies (IFS) says public spending is facing a £36bn squeeze from 2011 - with £15bn of the cuts needed yet to be identified.
Poll findings
With health and education protected, the axe could fall on defence, housing, transport and higher education.With health and education protected, the axe could fall on defence, housing, transport and higher education.
The think tank predicted "severe cuts" of the kind not seen in Britain since the late 1970s. The think tank predicted "severe cuts" of the kind not seen in the UK since the late 1970s.
But Justice Secretary Jack Straw said the IFS had not taken into account savings already made by the government. But Justice Secretary Jack Straw said the IFS had not taken into account savings already made by the government due to lower than expected increases in unemployment.
He told BBC News: "We've already spent £4bn less on unemployment benefits and income support for the unemployed than was anticipated."
The government hoped to make further savings by "moderating the rate of increase of unemployment", he added.
Debate call
Philip Hammond, for the Conservatives, said the IFS report "underlines the fact that the PBR... was a political statement designed for electioneering purposes rather than to address the real needs of the country".
The IFS estimates the cost to families of paying back the national debt is £2,400 a year for eight years.
It also warns that debt levels could remain high "for a generation" - at about 60% of national output - without policies to tackle the impact of the ageing population on the UK's public finances.
Lib Dem Treasury spokesman Vince Cable, who argues that no areas of public spending should be off limits when it comes to cuts, called for a "proper debate" on where the axe should fall.Lib Dem Treasury spokesman Vince Cable, who argues that no areas of public spending should be off limits when it comes to cuts, called for a "proper debate" on where the axe should fall.
"Because they are not discussing priorities openly a great deal of damage is being done," he told BBC News."Because they are not discussing priorities openly a great deal of damage is being done," he told BBC News.
TUC General Secretary Brendan Barber called for "radical new thinking" to avoid cuts to services and warned of possible industrial action over the "unfair" public sector pay freeze. Meanwhile, an opinion poll for the BBC suggests Mr Brown and Mr Darling are less trusted to steer Britain's economy through the economic downturn than Conservative leader David Cameron and shadow chancellor George Osborne.
He said there should be a "fairer contribution from the wealthiest" to help pay off Britain's debts. The poll, for BBC Two's Daily Politics programme, was carried out by ComRes after the PBR.
But BBC economics editor Stephanie Flanders said the IFS analysis suggested the tax rises in the pre-Budget report would "overwhelmingly" impact on the top 10% of earners. A third (33%) of those questioned said they trusted Mr Cameron and Mr Osborne most on the economy.
That compared with 26% saying they trusted Labour's Mr Brown and Mr Darling - a lead of seven percentage points for the Conservatives.
In a similar poll conducted in April, Mr Brown and Mr Darling had a lead of three points.
The Liberal Democrats recorded their highest rating yet to this poll question - with 16% saying they trusted party leader Nick Clegg and Mr Cable most. This compared with the April figure of 10%.