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Sunday, September 19, 1999 Published at 10:18 GMT 11:18 UK

UK Politics

Brown rules out cash handouts

Gordon Brown: Damping down Budget bonanza hopes

Chancellor Gordon Brown has again issued a clear warning to Cabinet colleagues that the government's cash surplus will not be used for a public spending spree.

He said that despite the healthy state of the public finances, money would not be made available for "giveaways" which could put long-term economic growth at risk.

The BBC's Political Correspondent Nicholas Jones : "Gordon Brown is trying so hard to put a stop to the speculations"
On GMTV's The Sunday Programme, Mr Brown said: "I have told my Cabinet colleagues we are not going to lurch into the irresponsible spending commitments of previous Conservative and Labour Governments.

"We are not going to make the mistakes that the Liberal party and Conservative party are making in only talking about how you divide up the cake."

Labour has succeeded in creating an economic "platform of stability" which provided a rare opportunity to generate sustained growth, he said. Recent Treasury figures have suggested the government could be heading for a £12bn surplus this year.

Warning to colleagues

Mr Brown said the debate over the next few months would be about investment, how we invest in our new technologies and skills, and about increasing productivity and strengthening the economy.

This will be seen as a clear warning to Cabinet colleagues such as Education Secretary David Blunkett and Health Secretary Frank Dobson.

Weekend reports said Mr Blunkett was anxious to see more cash spent on his department.

Mr Brown's comments come days after his upbeat economic forecast - predicting growth of nearly 3% - triggered calls from union leaders for greater public spending.

Prime Minister Tony Blair's speech to the TUC Conference last week, in which he highlighted the UK's flush finances, also raised expectations that more cash might be available for "spending" ministries.

Interest rate rise backed

But Mr Brown's comments will not have been made without Mr Blair's full backing, and will be seen as a clear message from both men that any minister demanding a big "giveaway" will be rebuffed.

Mr Brown also backed the Bank of England's recent interest rate rise.

The surprise decision by the Bank's Monetary Policy Committee to raise the base rate from 5% to 5.25% prompted criticism that the bank was being over-cautious, especially as inflation figures released shortly afterwards revealed prices rising at a 30-year low.

The Chancellor said the MPC was pursuing the right strategy to avoid a return to the consumer boom of the 1980s, fuelled by rocketing house prices.

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