I would have put up VAT, admits Darling

Former Business Secretary Lord Mandelson claimed in his memoirs that Mr Darling planned the move last year but was vetoed by Gordon Brown.

The now-shadow Chancellor told the BBC's Andrew Marr Show: "It's no secret, I said at the time and since Peter has actually spelt out in gory detail, I'm not going to deny what was patently true."

Asked whether his proposal to increase VAT was a "battle" he wished he had won, Mr Darling replied: "Yeah, obviously."

He went on: "There was a choice really – you could put up VAT or you could put up an income-related tax, which is what the National Insurance is. Actually the present Government have got both. It's been rather missed that they're putting up National Insurance and the VAT's going up."

Mr Darling said the coalition Government was taking a "hell of a risk" with its austerity measures.