Darling hints at tax cuts 'to help poorer families'

CHANCELLOR Alistair Darling hinted at surprise tax cuts to help hard-pressed families today as Labour moved to outflank the Tories on the recession.

Mr Darling vowed that he would not put up taxes and repeatedly stressed that he wanted to put money into "people's pockets".

His words came as it emerged that he is being urged by Labour MPs to use extra borrowing to provide fresh tax relief for low-income workers in next month's Pre-Budget Report.

The tax offensive was part of a concerted attempt to exploit the perceived weakness of shadow chancellor George Osborne, with Labour MPs lined up at Treasury questions in the Commons today.

Last night the Chancellor signalled that borrowing would have to be brought down over the medium term, triggering speculation that taxes may have to rise or spending cut after the general election. When asked directly by GMTV today if he was planning to put up taxes, Mr Darling replied: "No. At a time like this when the economy is slowing down, it's right that the Government supports people, supports businesses. For example we are reducing the amount of tax that basic rate payers are paying, and we have frozen fuel duty this year." He added: "I really do think that at this time what you really do not want to do is to be taking the money out of people's pockets, especially at a time when people are struggling to make ends meet. I want to help people. That's one of the reasons of course why I reduced the amount of tax that basic rate taxpayers pay. It's very, very important."

Labour sources have told the Evening Standard that tax cuts would offer the "perfect" way of outmanoeuvring the Conservatives because the party earlier this year opposed the £2.7 billion rise in borrowing to help reverse the impact of the 10p tax row.

Mr Darling also confirmed that he will use next month's Pre-Budget Report to "reprioritise" some spending projects which will be brought forward to combat the downturn.

He told GMTV that rising incomes would help the public finances once the country started growing again.

He said: "As the economy comes through all this, we need to make sure that the budget comes back into balance. When the economy starts to grow you actually get more taxes coming in because businesses are more profitable, more people are in work and therefore the tax take is greater."

With new figures showing that Shell posted profits of £6.5 billion today, the Chancellor repeated Gordon Brown's call for oil price falls to be passed on at the petrol pumps.

Labour underlined its determination to exploit Mr Osborne's troubles over "Yachtgate" today as he appeared at the despatch box for the first time since the row blew up. MPs lined up in the Commons to quote from a Labour dossier highlighting the shadow chancellor's poor judgment on policy.

It claimed that Mr Osborne had failed properly to cost plans to give NHS patients their own hospital rooms, with new Department of Health figures showing an £8 billion black hole in Tory plans. Mr Osborne is also under fire over his policy on fuel duty, which committed a Tory government to putting up fuel tax when oil prices fell.

Mr Darling signalled last night that he wanted interest rates to fall further. Bank of England monetary policy committee member Danny Blanchflower also called on fellow members of the Bank of England's Monetary Policy Committee to cut interest rates aggressively as the US slashed its main rate to just one per cent. Mr Blanchflower complained that fellow MPC members had "not been sufficiently forward looking" in the past year.

Former Tory Chancellor Lord Lawson warned against tax cuts and said interest rate cuts were a better weapon against recession.

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