Brown 'to cut income tax'

Gordon Brown will unveil his budget in March

Chancellor Gordon Brown will cut income tax for all in his Budget next week, according to newspaper reports.

Prime Minister Tony Blair ruled out pre-election "giveaways" on Friday, promising to "invest, invest, invest" in public services.

And the Chancellor has reportedly decided against cutting the 22p basic rate.

Instead he is expected to increase the £1,520 band on which the 10p rate is levied so that people pay less tax at the basic and higher rate.

Blair: "Invest, invest, invest"

A Treasury spokesman refused to comment on "pre-Budget speculation".

The move would provide a cash boost for Britain's lowest earners, who would not gain from a cut in the basic rate of tax.

And savers, particularly pensioners, would benefit from a lower starting tax rate for their nest eggs.

Earlier Mr Blair told party activists in Wales that Labour was winning the argument for increased investment in public services.

And the improvements and prosperity created since 1997 would not be put at risk to secure a second term, he said.

It is time to ask not what we can give away for the next election but what we can invest for the next generation.

Tony Blair

"The Budget must be a Budget for continuing economic stability, low mortgages, good for business and for investment in public services," Mr Blair said.

"It is time to ask not what we can give away for the next election but what we can invest for the next generation."

More teachers, more nurses, lower unemployment and better pensions were needed, the Prime Minister admitted.

But Labour had brought marked improvements in all those areas and would continue to build on that, he pledged.

"Our choice is to invest, invest, invest," Mr Blair said.

"Investment plus reform, our recipe for improving our hospitals, transforming our schools, modernising out railways, recruiting and retaining nurses and teachers.

"Of course it takes time. We are turning round decades of under-investment. "But Britain cannot afford another dose of public services on the cheap. We cannot cut back on the services and opportunities that give us strength."

Crystal ball

While Labour built up public services, Tory leader William Hague was again planning to cut them back, Mr Blair said.

"You don't need a crystal ball to know what Mr Hague would do if he ever got his hands on power," he said.

"You just need to look as his record as Welsh Secretary. Nurses cut. Doctors cut. Jobs cut. Housing cut.

"The only thing not cut was the tax bill. That soared."

Everyone now accepted economic stability was the key goal but "investment in public services is the key challenge", Mr Blair said.

"Tackling poverty and chronic unemployment is recognised as vital," he added.