Darling plans 'responsible' Budget
Chancellor Alistair Darling will deliver a "responsible and disciplined" Budget next week to ensure Britain follows a stable course as it heads into recovery, Business Secretary Lord Mandelson said.His comments came amid speculation that Mr Darling may use higher-than expected tax revenues to pay down the UK's record debt - currently 56% of GDP - by as much as £5-£10 billion.
The need to rein in spending looks set to rule out "giveaways" in next Wednesday's Budget, but figures released on Thursday suggest Mr Darling may be able to downgrade his prediction of £178 billion public sector borrowing this year and make some inroads into the deficit.
But Conservatives accused Labour of being in "chaos" over tax, after Lord Mandelson suggested the Government might be ready to impose further hikes in 2011, on top of the new 50% income tax rate and the 1p National Insurance increase already announced.
The Business Secretary said that by the time of a spending review due to come into effect in 2011, the Government would be in a better position to judge "what the economic circumstances require, both in raising taxation - should that be necessary in addition to what we have already announced - or cutting public expenditure".
His comments followed hot on the heels of Chief Secretary to the Treasury Liam Byrne's retraction of a suggestion that Labour might be able to rule out a post-election rise in VAT.
Conservative Treasury spokesman Philip Hammond said: "Labour is in chaos on tax. First the Chief Secretary was forced to backtrack and admit that Labour would not rule out VAT increases.
"Now Peter Mandelson admits there may be tax rises in the second year of a new Labour government. People will be asking who speaks for the Government on tax - Liam Byrne, Peter Mandelson or Alistair Darling."
But Lord Mandelson denied he had let slip secret plans for tax rises.
He made clear no Chancellor would "bind his hands" on future tax and spending decisions, but said these would be taken at the time in the light of prevailing circumstances.
His comments followed hot on the heels of Chief Secretary to the Treasury Liam Byrne's retraction of a suggestion that Labour might be able to rule out a post-election rise in VAT.
Conservative Treasury spokesman Philip Hammond said: "Labour is in chaos on tax. First the Chief Secretary was forced to backtrack and admit that Labour would not rule out VAT increases.
"Now Peter Mandelson admits there may be tax rises in the second year of a new Labour government. People will be asking who speaks for the Government on tax - Liam Byrne, Peter Mandelson or Alistair Darling."
But Lord Mandelson denied he had let slip secret plans for tax rises.
He made clear no Chancellor would "bind his hands" on future tax and spending decisions, but said these would be taken at the time in the light of prevailing circumstances.
© 2012 Press Association