Budget 'will boost growth and jobs'

There will be no more tax rises and no more spending cuts in this week's Budget, which will set out a package of measures to boost growth and jobs, Chancellor George Osborne said today.

But he left no doubt that he will resist Labour calls to scale back the pace of deficit reduction, saying: "That's not going to happen."

Mr Osborne confirmed he will raise income tax thresholds in real terms on Wednesday, amid reports that he may take all those earning under £8,000 out of the tax altogether.

And he gave a strong hint that he will postpone the 1p rise in fuel duty scheduled for April 1 in order to relieve pressure on motorists struggling with prices at the pump of £1.30 or more.

But asked on BBC1's Andrew Marr Show whether he will rein in the cuts programme, as Labour has demanded, the Chancellor replied: "That would be a huge mistake for the country.

"We would lose economic stability, we would be back in the mess of wondering what is going to happen tomorrow to Britain's credit rating. That's not going to happen."

Mr Osborne said that the necessary cuts and tax rises were all included in last year's emergency budget, leaving him free this year to concentrate on growth and jobs.

"Having undertaken the rescue mission last year, I don't have to come back and ask for more this year," he said.

"So I can say in the Budget this week I am not going to be asking for more tax increases or more spending cuts.

"We have asked what is required of the British people in last year's Budget and that enables us in this year's Budget to move on to putting in place the policies that will help Britain compete, help Britain create jobs and growth in the future."

Mr Osborne confirmed that this will involve a large boost in apprenticeships and work experience schemes for the young unemployed, and said that he would expand university technical colleges to provide vocational skills.

Asked whether he will be able to postpone the implementation of the fuel duty rise contained in the final budget of his Labour predecessor Alistair Darling, Mr Osborne said: "Of course I am looking very carefully at that to see if I can afford to do something."

On tax thresholds, he confirmed: "We are going to be able to make a further advance on that. I am absolutely committed to a real increase in personal tax allowances each and every year."

Mr Osborne said that the March 23 Budget will address the "long-standing and deep-seated problems" which have affected Britain - such as the shortage of training for technical and engineering work - and deliver "far-reaching reforms to equip Britain for the future".

But shadow chancellor Ed Balls said that Mr Osborne's determination to eliminate the deficit within four years - rather than halve it, as Labour advocates - was to blame for rising unemployment and slowing growth.

Mr Balls told the Andrew Marr Show: "George Osborne's plan is not working, we are not getting the jobs and growth we need to get the deficit down and deal with the competitive challenges.

"The question for the Budget, for George Osborne, is what will he actually do to get jobs and growth into our economy? So far, we have seen precious little."

He added: "What's happening in our economy now is because of his decisions to go too deep, too fast."

Last year's Budget included an increase in the income tax threshold from £6,475 to £7,475, following the coalition agreement commitment to move towards the £10,000 level promised in the Liberal Democrat manifesto.

When it comes into effect next month, the change will hand around £200 to all basic-rate earners and take about 880,000 out of the tax altogether. Reports today suggested that the Budget will unveil a further rise to £8,000 for 2012.

Lib Dem Chief Secretary to the Treasury Danny Alexander told The Observer: "There is nothing more fundamentally liberal than saying those who work but receive least reward should pay no tax.

"That's why, when the Government unveils its Budget on Wednesday, we will set out further real progress towards our goal of taking anyone earning less than £10,000 out of tax altogether."

Mr Osborne told the News of the World that he will use some of the money raised from the Government's £2.5 billion banking levy to create "the most apprenticeships this country has ever seen, and a big expansion of work experience places".

Official figures released earlier this week showed 974,000 young people out of work in the three months to January, the highest since records began in 1992. The youth unemployment rate rose by 0.8% to 20.6%, also a record high.

Labour's Liam Byrne, shadow work and pensions minister, urged Mr Osborne to reverse the "counter-productive" decision to cancel the Future Jobs Fund and education maintenance allowance.

Mr Byrne said: "The Conservative-led Government also needs to address the fundamental cause of rising unemployment and our faltering recovery, with its reckless policy to cut too deep and too fast. They need to get a Plan B that puts jobs and growth first, before it's too late."

Shadow chief secretary to the Treasury Angela Eagle said: "George Osborne's claim to have mounted a 'rescue mission' of the British economy shows just how out of touch he is with what's happening in the real world.

"His reckless plan to cut too deep and too fast has taken a growing economy with falling unemployment and delivered an economy which shrank at the end of last year, a 17 year high in unemployment and rising inflation.

"George Osborne needs to snap out of his denial and rethink the speed and scale of cuts and tax rises which are hitting families hard in the pocket and derailing our economic recovery.

"There need to be tough decisions, but you can't get deficit down if the economy doesn't grow strongly this year and there are fewer people in work making a contribution. George Osborne needs to think again and get a plan B that puts jobs and growth first, before it's too late."

Friends of the Earth's economy campaigner Simon Bullock said: "The Chancellor should tackle the impact of rising fuel prices by focusing on the root of the problem - the UK's economic addiction to oil.

"Urgent measures are needed to make public transport cheaper and more convenient, encourage greener motoring and reduce our dependency on car travel.

"Building a clean, safe and low-carbon economy will create tens of thousands of jobs and put the UK at the forefront of tackling climate change."