Brown's balancing act

By BBC News Online political correspondent Nick Assinder.

When Gordon Brown makes his long-awaited pre-Budget statement he is expected to put aside his Iron Chancellor image and set his sights firmly on the next election.

His last budget saw him adopting a new "giveaway Gordon" role with a massive boost in public spending over coming years, and there is bound to be more to come.

He was always planning to loosen his purse strings further to encourage a pre-election feelgood factor while, at the same time, insisting prudence was still his watchword.

But thanks to reports that he may have as much as £16bn to slosh around next year, expectations have been dramatically raised.

He is already coming under intense pressure to cut taxes in general in a bid to keep the economy buoyant.

He also has to tackle the two key issues - pensions and fuel tax - which have buffeted the government over the past few weeks.

Next year's budget is almost certainly the last before the next general election and, as a result, will be closely examined by the Tories for signs of election "bribes".

But if the poll comes in the early summer, as expected, there will be no time for many of the tax and spending measures to feed through.

Conference defeat

The government is already banking on concrete improvements to public services, as a result of the last budget, feeding though in time for the election.

So the chancellor's aim will be to build on that with promises for the future which will only bear fruit if Labour is re-elected.

In the short-term, however, the pre-Budget statement will be judged on how it deals with pensions and fuel taxes.

Thanks to increases in petrol prices, pensioners are already guaranteed a bigger increase next year.

The annual pension uprating is based on the previous September's inflation figure.

Last month that was higher than expected, at 3.3%, because of the oil crisis. So single pensioners will get an automatic increase of £2.23 a week taking their pension to £69.73 a week.

But after last year's controversial 75p increase, pensioner groups and the trade unions are demanding much bigger increases.

Some unions have led a demand for the government to restore the link with average earnings which was introduced by the previous Labour administration but abandoned by the Tories.

That has been ruled out by ministers, and Tony Blair suffered an embarrassing party conference defeat over the issue in Brighton in September.

In an attempt to win over pensioners, Mr Brown instead promised a new pensioner credit in 2003 and "transitional" arrangements between then and now.

It was later hinted by officials that that could see single pensioners getting an extra £5 a week. But the chancellor has never confirmed that figure.

Private meetings

What would anger many pensioners would be to see increases in benefits such as heating allowances, without a substantial rise in the basic state pension.

The Tories have already seized that potential advantage by announcing they would scrap all the special allowances and channel the money back into the basic pension.

So Mr Brown will have to do something pretty spectacular to satisfy pensioner groups and the trade unions.

He will also have to come up with something imaginative to deal with the fuel price crisis.

Farmers and hauliers gave him until 13 November to answer their demands or face further disruption.

And both he and Mr Blair told their party conference that they were listening to concerns over the issue.

Mr Brown has since held a series of private meetings with hauliers and farmers' representatives to hammer out a new deal.

At the same time, however, the government has been hardening its stand against the tactics used by the protestors amid new reports of widespread intimidation used against petrol tanker drivers.

But it is inconceivable Mr Brown will not act, particularly as petrol prices have risen again as a result of the Middle East crisis.

One question will be whether he wants to target only the protestors, or offer concessions to motorists as a whole.

Across the board tax cuts appear to have been ruled out, but there are any other number of possibilities.

There has been much talk of changes in the excise licence, "blue" diesel or special fuel credit cards for hauliers and a "Brit-disc" system to force foreign truckers to pay to use roads in the UK.

All the options have their problems and it is still unclear exactly how far Mr Brown is really prepared to go to satisfy the protesters' demands.

But it does seem likely that he will want to do something for ordinary motorists as well.

It may appear to go against the government's green manifesto, but motorists have become increasingly frustrated with ministers and there is a widespread feeling that the government wants to woo them before the election.

What is certain is that the statement is more eagerly awaited than any of the chancellor's previous announcements and - while he has plenty of room for manoeuvre - he will need to pull off a particularly neat balancing act.