Brown says he won't bow to fuel pressure

Gordon Brown says he will not bow to "unaffordable" demands for big cuts in fuel tax that would put at risk economic stability.

Addressing the CBI annual conference in Birmingham, ahead of Wednesday's pre-budget report, he said that there must be no return to the "short-termist" economics which led to the "boom and bust" of the 1980s.

"With our prudence matched by higher productivity, Britain can grasp the great interest rate prize that has eluded us for a generation - a long-term future of low and stable interest and mortgage rates upon which people can rely and business can plan ahead," he said.

"But this would all be put at risk if unaffordable demands, such as for cuts in fuel duties of up to 26p, were met on Wednesday, with interest rates rising soon after."

Mr Brown's speech will be seen as the latest shot in the high stakes war between the government and fuel protesters in the run-up to their November 13 deadline.

He said that the average mortgage holder was around ?1,000-a-year better off because the cost of borrowing, over the past three years, had been on average 4% lower than it had been over the previous two decades, all of which would be jeopardised by big tax cuts.

The chancellor acknowledged that it was an "important week" for the economy and hinted that he would use his pre-budget report to address the "genuine concerns" of hauliers and farmers with a targeted package of measures.

These could include assistance for hauliers investing in modern vehicles and training for staff, and help for farmers seeking to diversify into different agricultural sectors.

The chancellor signalled that the pre-budget report would include incentives to enhance business competitiveness, with further tax breaks for employee share ownership and simplification of the VAT system.

His speech was warmly welcomed by CBI director general Digby Jones, who said that Mr Brown appeared to be addressing the key concerns of industry.

"The chancellor gave some promising hints that he wants to tackle our long-term business challenges.

"We were particularly pleased by his suggested support for structural reform in the farming and road haulage sectors," Mr Jones said.


Useful links
Special report: Budget 2000
Special report: Labour in power
Special report: The petrol crisis
British government
The CBI