Brown to aim at jobs for all

Chancellor Gordon Brown is to revive full employment as a central economic objective of government in his Budget next month.

The Treasury is to have a new "mission statement" which will restore the post-war consensus goal of "achieving high and stable levels of growth and employment". It will inform the Chancellor's Medium Term Growth Strategy to be announced as the centrepiece of the Budget, which is now likely to be brought forward to 10 June.

Treasury officials are redrafting the department's mission statement to include the wartime government's commitment to full employment, published in a White Paper in 1944.

Mr Brown's aides say the change is not simply cosmetic, but designed to ensure that the Bank of England's fight to maintain price stability is pursued "without prejudice to the Government's economic policy, including the objectives for growth and employment".

A source close to the Chancellor said: "We don't want to be soft on inflation, but we don't want to be inflation nutters either." The restoration of the full employment pledge, for long a political ambition of the trade unions, marks a watershed in public policy. The consensual commitment to growth and jobs that marked the "Butskellite" post-war era was abandoned by Margaret Thatcher in 1979, and Labour leaders have been cautious about reviving it.

The Budget, the date of which will be announced this week, will be Labour's first since 3 April 1979. The Chancellor has ruled out any increase in income tax but other taxes are likely to rise. Government sources expect a big hike in petrol duty, partly to fund public spending on transport and partly to help meet existing targets on exhaust emissions.

Mr Brown will also unveil details of the "windfall tax" on privatised utilities, aimed at raising at least pounds 3bn for a welfare-to-work programme that Labour says will put 250,000 young people and long-term unemployed into work. It is thought that employers will be paid a pounds 75 a week rebate for taking on young people out of work for more than two years. A rebate of pounds 60 a week would go to companies employing jobless under-25s.

There is speculation that the Chancellor will also spring some surprises in his first Budget, changing allowances and tax thresholds. He could reduce further - even scrap - mortgage interest relief, which could save more than pounds 2bn a year.

Mr Brown's pledge to reduce tax on domestic fuel from 8.5 per cent to 5 per cent at a cost of pounds 400m will certainly be redeemed, despite some misgivings among European Commission officials. The Chancellor could also take the first steps next month towards introducing a 10p in the pound rate of income tax for a part of workers' earnings, though Labour has stressed this is a long-term objective.