Brown at war with think-tank over 'fudging' of rules

A war of words erupted between the Treasury and one of the country's leading economic think tanks yesterday over accusations Gordon Brown had "fudged" his cherished Budget rules.

Martin Weale, the director of the National Institute of Economic and Social Research, last week accused the Treasury of changing the way it assessed the "golden rule" that insists the public finances must balance.

But last night Gus O'Donnell, the permanent secretary at the Treasury, said he was "disturbed" by Mr Weale's accusation.

He said the Government would meet its fiscal rules and insisted that it would meet its spending commitments up to 2008. He told the Society of Business Economists: "We are meeting the golden rule, we have been consistent in our calculation of the golden rule and we will never fudge the calculation of the golden rule."

Last week Mr Weale had said the Government looked set to break the rule that it must not borrow to fund current spending over the economic cycle.

He accused the Treasury of defining the rule in terms of a share of GDP rather than in nominal cash terms, which would give it more leeway.

Last night, Mr Weale was unrepentant. "I think the Treasury is giving a definition of accumulated surpluses that no one else would think of using," he said.

"If the Treasury ran a bank where I could deposit half my income in one year and withdraw half of a higher income the next year without being told I was overdrawn, that is a deal I would happily take up."