Next spending round will be 'tough', says Darling

The chancellor has admitted that the next spending round for government departments will be "tough".

One day after he announced the 2009 Budget, Alistair Darling told the BBC that public spending has to be "rigorously examined" to get the UK out of the economic slump.

He maintained that investment in public services was consistent with more efficient spending.

There has got to be action to bring borrowing and debt down, Darling said. But the government must continue to fund health and education as "an investment for the future", he added.

"The next spending round will be tough, but where I believe we can make changes is I think that we can be rather more efficient than we have been in the past," he said.

"We cannot carry on as though nothing has happened. I don't make any bones about the fact that public spending does need to be rigorously examined.

"After a shock like this to the system, I remain as committed as I ever have been making sure that we have got the first class services that this country needs.

"But that is entirely consistent with saying that we need to be more efficient, and continue to be more efficient.

"I have not changed my view one jot but spending needs to be efficient."

The chancellor also predicted that the economy will start to grow at the end of this year.

In his Budget speech, Darling said that the UK economy would return to growth by the end of 2009 and expand by 3.5 per cent in 2011.

He defended the predictions, which have been criticised as too optimistic, saying: "Next year I think the economy will start to grow and I think it will grow thereafter, but that is only going to be the case if we continue to take the action necessary to make sure that we help people, we help families, we help businesses get through this."

But he admitted that it is "very difficult to be absolutely certain as to what will happen".

In his Budget plans, the chancellor has proposed measures to halve the deficit in five years.

"That meant that I had to ask people at the top end, the top one per cent earning over £150,000 from next year, to pay a bit more," he stated.

"Yes, I have put up some indirect taxes as well. But I had a duty, I think, to set a reasonable course. I don't want to do it too quickly because that would damage the economy.

"But I do have to make sure that as a nation, we live within our means," he added.

Gordon Brown also entered the debate over the 50 pence top rate of tax on Thursday, after Darling was accused of abandoning one of Labour's manifesto pledges.

Some commentators said the move to raise taxes on those earning more than £150,000 a year was a return to old Labour 'class war' politics.

But the prime minister, attending a Prince's Trust event in London, denied the claims.

"The point that I think we have got to accept is if we are going to give people opportunities they need for the future, then there has got to be a contribution by those who have the most and who have gained the most over the last few years," he said.

"This is not taxation for its own sake, it is tax for a purpose. This is Britain fighting back against the international recession, this is Britain taking bold action for recovery."

He added: "What we are about is aspiration, we are about helping people get on, we are about a giving people new chances, we are about helping people make the most of their potential. New Labour, that's what we're about," he said.

"It is a world of opportunity for all and responsibility by all."