Darling denies govt is putting fiscal rule at risk

Chancellor Alistair Darling was forced to defend his decision to borrow
£2.7bn in this financial year to fund a £120 hand-out to each low- and
middle-income household to compensate for the abolition of the 10p tax band.

Despite telling the
Treasury committee
he did not believe the loan would put the rules at risk,
his margin to move in his autumn pre-Budget report would be extremely tight as
pressure is mounting from Labour MPs for more tax cuts to help low-income
families, the Financial Times reports.

Darling would not commit to an extension of the £2.7bn compensation package
beyond the 2009 Budget, despite warnings from MPs on the committee that
withdrawing it could leave 13m households worse off.

He also told the Commons committee he did not expect a budget windfall from
higher revenues because of the soaring oil prices – Treasury revenues would
suffer in other areas, including a general economic slowdown.

Further reading:

No such thing as a safe bet for Darling

PM faces another revolt within ranks over

the Financial Times story

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