Brown's 'stability first' pledge

Gordon Brown will today warn Labour that next week's Budget must safeguard the economy rather than take risks with a pre-election giveaway.

He will vow to "put stability first" in a cautious package expected to combine modest tax rises with tough spending controls.

Mr Brown is set to please the unions and the Left by announcing a rise of seven per cent in the minimum wage paid by employers - and a tough crackdown on tax-avoidance schemes.

But his message, in a keynote speech to party faithful in Manchester today, is there can be no risk-taking with the public finances in his economic package, despite the looming election.

"The first, the major, the most important theme of that Budget will be to lock in stability and invest in science, skills and enterprise," he will say.

City analysts expect the Chancellor to target home-owners and motorists in his eighth Budget next Wednesday.

Stamp duty could rise on the most expensive homes and petrol may go up by twice the 1.4p per gallon increase that would bring it in line with inflation.

Mr Brown is also expected to target drivers of big four-by-four cars and company vans for big increases. Tax concessions for small businesses are likely to be phased out, and the annual limit for investment in tax-free ISAs cut by £2,000 to £5,000 from 2006.

His no-risks theme also heralds a tough spending round in the summer, with ministers being warned to expect to find savings. But a fierce Tory counter-attack will charge that Mr Brown has already presided over a colossal rise in spending and tax - with little to show for it.

In a broadside to be published next week, Right-of-centre think-tank the Centre for Policy Studies will point

out that total spending has ballooned from £322 billion in 1997, when Labour came to power, to a planned £519 billion next year.

It will say that the tax rises - either open or by stealth - in Labour's first six years amount to an extra £1,500 for every man, woman and child in the country.

The Centre's director, Ruth Lea, forecasting higher taxes to come, declared: "The profligate Chancellor has replaced the prudent Chancellor."

However, although governments traditionally go on a spending splurge before elections, Mr Brown believes his strategy will convince voters the economy is safe in his hands.

The Chancellor, addressing Labour's spring conference, aims to put his reputation for economic competence at the centre of the next election battle.

Saying Labour has delivered the best inflation and unemployment figures for decades, he will claim Tory policies would risk a return to the recessions of the Eighties and Nineties.

"Our aim for Britain is stability - not for a year or two but to strive for stability for the long term," he will say.