Ministers warned no extra cash available

Published on Saturday 19 July 2008 19:36

CABINET ministers have been warned there will be no more money for public services, as taxpayers are reaching the limits of what they are willing to pay.

Chancellor Alistair Darling acknowledged British workers were feeling "squeezed" and revealed he told colleagues at last week's Cabinet meeting not to ask for budget increases for services like schools, hospitals, transport and defence.

In a gloomy assessment of the state of the economy, Darling said conditions would be difficult "for quite some time" and he did not know when they would improve.

The Chancellor gave a clear hint that tax rises were off the agenda for the foreseeable future, and said: "People will pay their fair share but you can't push that. My judgment at the moment is that there are a lot of people in this country who feel they work hard, they make their contribution and they're feeling squeezed.

"Every Chancellor has to be very conscious of the fact that there's a balance to be struck between how much you can spend and how much people will say, 'OK, if you've got another pound to spend remember me'."

And he added: "I've been very clear with my colleagues that there is no point them writing in saying 'Can we have some more money?' because the reply is already on its way and it's a very short reply."

Darling was speaking amid widespread speculation that a Treasury review of the Government's fiscal rules will result in them being loosened in order to allow more borrowing.

Following figures showing net borrowing hit a record 24.4bn in the first quarter of the financial year, analysts said that the sustainable investment rule must be relaxed if the Government is to avoid tax increases or spending cuts.