Brown: Slowdown will not force us to cut spending

Labour conference: Treasury
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Indy Politics

Gordon Brown vowed yesterday that he would not be forced into cutting Labour's plans to inject billions of pounds into health and education by the slowdown in the world economy.

But the Chancellor warned Cabinet colleagues that they would have to moderate their demands for extra cash in order to leave him room to announce more money for hospitals and schools in future years.

Mr Brown delighted the Labour conference in Brighton when he insisted that the global economic problems would not put at risk the Government's "progressive goals", such as tackling child and pensioner poverty and creating full employment.

The Chancellor insisted that Labour would not "relapse back into the irresponsible quick fixes of the past" by abandoning its spending plans, relaxing its discipline or breaking its manifesto pledges not to raise tax rates.

But he stressed the need for financial discipline was even greater because of the uncertain climate caused by the terrorist attacks in America. His message to fellow ministers was clearly aimed at the bids they will submit next spring during a review of the Government's spending plans for the next three years.

Mr Brown said: "We have not come this far together – and together taken so many difficult long-term decisions to put our stability and prudence at risk now, when we know stability and prudence are the foundation for achieving the ambitious goals we have been elected to deliver. So vigilance now is necessary for further progress on our priorities later.

"It is only by being cautious now, maintaining our discipline and building public support for the budget and spending decisions we will have to make in the coming months that we will be able to achieve our aim in next year's spending review – to release further new resources for tackling poverty and for public services."

In a sign that ministers are bracing themselves for a rise in unemployment as the economy slows down, he said his Pre-Budget Report in November would expand the New Deal programme for the jobless.

Mr Brown spoke of the "testing times" facing the British economy following the atrocities in America. But he declared: "In times of adversity we are not less obliged but more obliged to meet our international responsibilities.

"It is in difficult days like these we realise that we are not just isolated individuals but fellow human beings bound together by common needs, mutual interests, shared hopes and linked destinies." He urged fellow finance ministers from the G7 leading industrial nations, who meet in Washington this week, to extend more debt relief to the poorest countries.

Outlining his personal vision, Mr Brown said the words of Robert Kennedy should be the party's guide: "We see suffering and seek to heal it, see pain and seek to end it, see injustice and seek to overcome it, see prejudice and seek to triumph over it."

The Chancellor recalled that Britain had never lost sight of its commitment to social progress during its "darkest hour" after the Second World War. He said the post-war Labour Government had forged a vision for the future while meeting the awesome challenges of the times.

"Inspired by our history, more determined because these are testing times, let the message ring out: we can and we will achieve in our generation a better future," he said.

He listed Labour's key goals as security and stability; full employment; enterprise open to all; an end to child and pensioner poverty; world-class public services, and justice for all, both nationally and internationally.

Later Mr Brown's aides insisted his speech was "positive and confident" and denied he was warning that the public finances were heading for trouble. They stressed that, because the Treasury's figures were based on cautious assumptions, it would have a £9bn-a-year cushion to help it survive the global slowdown.

But Mr Brown's call for "vigilance" by ministers in the wake of the terrorist attacks was seen by the Tory Opposition as an attempt to find an excuse for his previous mistakes.

Privately, some ministers admit the potential gap in the Government's revenues in future years will have little to do with the looming military action in Afghanistan. They say Labour was always going to face a difficult choice between tax rises and spending increases after the present three-year spending plans expire in the 2003-04 financial year.