'Our hard decisions' on reducing debt

Gordon Brown said the Government was taking the "difficult decisions" needed to halve the 178bn deficit, decisions the Tories refused to take.

And he stressed that rises in National Insurance and increases in the top rate of tax would help the economy and protect front line public services.

Tory plans to cut the deficit more quickly would only serve to keep Britain in recession for longer, he claimed.

Mr Brown hailed his plan to get the economy back to growth as well as drive down the deficit over time.

He said: "Our deficit reduction plan was the first in the world. It is halving the deficit in four years.

"We are raising your taxes to do it. You will have to pay more in the top rate of tax to do it.

"The pension tax reliefs that were very generous in the past have had to be removed.

"We are raising National Insurance by one per cent to protect our public services so that we can still spend more on health and more on education and more on policing."

Mr Brown signalled the upcoming pain faced by the public sector, outlining how his plans would see real terms public spending growth of just 0.8 per cent each year.

He added: "We are taking the difficult decisions that the Conservatives refuse to take to halve the deficit over the next four years.

"If you want to halve the deficit more and more quickly you will inevitably hold this country in recession longer.

"But if you want to take the moderate course which we are taking, which is the reasonable course, having dealt with the huge financial crisis that wasn't caused by us, but a financial crisis we had to deal with, we are now taking the action that is necessary," he said.

The scale of the national debt has become an increasing concern, with the Tories arguing that the recently ended VAT reduction was a measure the country could not afford when borrowing levels were rising so quickly.

Labour have argued that encouraging spending was a necessary measure to help bring the country out of recession, however.