Labour's pledge on income tax

TONY Blair launched Labour's General Election manifesto today with a pledge not to raise the basic or top rates of income tax in the next Parliament.

The party's blueprint for 5 May also promises not to extend VAT to food, children's clothes, books, newspapers and public transport fares. But it gives no commitment on National Insurance contributions - an omission certain to be seized on by opponents.

However, a major report from the International Monetary Fund said he would have to raise taxes or slash spending. The warning comes in the IMF's twice-yearly report which forecasts that the British economy will grow by 2.6% this year, well below the 3.5% forecast by Chancellor Gordon Brown in his March Budget.

Blair unveiled the 110-page, 23,000-word document - in the form of a paperback book - at London's Mermaid Theatre, alongside the whole Cabinet.

In it he confirmed he will stand down before the next election which follows the 5 May poll, saying this will be 'my last election as leader of my party and Prime Minister of our country'.

The manifesto said that a Labour Government would continue to make 'targeted tax cuts for families and to support work'. However, the continuing crisis at MG Rover threatens to overshadow the manifesto launch. Carrying signs that read 'Please Save My Dad's Job', families of MG Rover workers planned a protest to coincide with the manifesto launch.

Blair has put the economy at the heart of his campaign for re-election, and the problems besetting Rover and its some 6,000 employees have proven to be yet another test for the Prime Minister.