No election bribes from Chancellor

Published on Saturday 20 March 2010 19:34

THERE will be no election sweetener "giveaway" Budget this week because the UK government simply cannot afford it, Lord Mandelson has revealed.

In a Scotland on Sunday interview ahead of Wednesday's Budget, the First Secretary of State claimed that a pre-election feel-good Budget would not be popular with voters, amid fears over the parlous state of public finances. In any case, he said, the money was not there for "giveaways". "It's time to be serious and honest with people," he said.

Mandelson's comments come as Chancellor Alistair Darling prepares to use the small funds available to him to increase support for the unemployed by funding more training and work placements for long-term claimants.

Darling will attempt to position Labour as both cutting back on the deficit, while planning for growth as he pledges to use government spending to keep people in the job market.

Mandelson said: "The public know we can't afford, in the present economic circumstances, to deliver a giveaway Budget, nor do they want the government to put the recovery at risk."

Darling is also expected to increase revenues through swingeing increases in alcohol duty, which would cause fury in Scotland's whisky industry. A minimum 5 per cent increase on duty across the board has been planned, but the increase might be as high as 10 per cent, with taxes on cheap high-strength drinks, such as cider, expected to rise even higher.

Darling will also signal his support for a global tax on investment banks. Unlike the Conservatives, however, the Chancellor will hold back from introducing the tax unless it is brought in worldwide.

There were reports yesterday Darling may react to the sudden petrol price rises by delaying a 3p rise in fuel duty, due on 1 April. The AA yesterday said average petrol prices rose by 4p a litre in the past four weeks. But delaying the increase to October would cost the Treasury 750 million just as it plans to start reducing a 170 billion a year deficit.

Mandelson said the Budget would focus on cutting the deficit, while supporting growth. He claimed the government would continue to spend on getting people back into work. One scheme, which guarantees those aged 18 to 24 a job or training place, is likely to be extended. He said: "What we've seen in previous recessions is a generation of young people where joblessness was turning into long-term employment."

He also took a swipe at his long-time Labour enemy Charlie Whelan, the political director of the Unite union, which has called this weekend's BA strike. Asked about Whelan's influence in the election campaign, Mandelson said it was "largely exaggerated, chiefly by himself".

Meanwhile Labour sources have revealed former prime minister Tony Blair will feature heavily in the campaign, with a brief to target David Cameron's "failure" to modernise the Conservatives.

And the Scottish Government last night cranked up the pressure over the Budget, demanding the Chancellor keep the public spending tap flowing next year, and bring forward budgets from coming years.

Finance secretary John Swinney said better than expected public finance figures last week – which handed ministers 5bn-10bn more than predicted – meant the government could relax spending controls. Swinney said: "We now know the UK government is expected to borrow slightly less in 2009-10 than forecast. The Chancellor has more room to boost capital investment in 2010-11.

"He should use Wednesday's Budget to allow the Scottish Government to bring forward further vital capital spending and build on the vast amount of work already underway to sustain jobs across Scotland."

• Two opinion polls last night confirmed the Conservative lead over Labour.

An ICM poll for the News of the World put the gap at six points and a YouGov poll for the Sunday Times gave Cameron a seven-point lead.