Pre-Budget report should be "honest and bold"

Think-tank calls for long-term spending cuts and tax rises

Next week's pre-Budget Report should establish an "honest and bold" package of long-term spending cuts and tax rises, according to the Institute of Public Policy Research (IPPR).

The IPPR said that chancellor Alistair Darling should use the 9 December report to start making tough decisions to reduce the UK's deficit.

It said that he should not try to hide "unpopular but necessary" measures such as long-term spending cuts and tax rises, and recommended that he give a clear vision of how the tax system will look in the next few years, rather than relying on incremental change.

In a report entitled Age of Austerity, the left-of-centre think tank recommends an increase in taxes on middle Britain to avoid drastic cuts in public services. It suggests the use of "green taxes", fairer property tax, or the abolition of the upper earnings limit on National Insurance.

The IPPR does not think that the NHS should be protected from state spending cuts, which David Cameron has pledged, as this will mean even more "swingeing" reductions for other public services.

However, it suggests that spending on the future, including infrastructure such as the rail network, skills training, and early intervention for children in troubled families, be maintained.

Carey Oppenheim, IPPR co-director, said: The Pre-Budget Report is one of the last opportunities before the general election for the Government to make an honest and bold statement about how it will tackle the public finances and to set out its vision for the economy over the next five years.

"Learning the lessons of the expenses crisis, now is the time for the Government to be honest with the public and engage them in a debate about priorities. This will mean proposing measures that are likely to be unpopular, but necessary, if the Government is serious about closing the UK's fiscal deficit."