Darling ''to announce VAT cut''

Chancellor of the exchequer Alistair Darling seems set to announce a cut to VAT in his pre-budget report statement later today.

Reports suggest that the sales tax will be reduced from 17.5 to 15 per cent.

In addition, proposed tax increases on vehicle excise duty and corporation tax are also set to be scrapped, reports suggest.

Another attention-grabbing change is the potential introduction of a 45p income tax band for people earning over £150,000 a year.

This change could come into effect after the next election, the BBC reports.

Mr Darling received strong support for radical action from prime minister Gordon Brown today.

"This is not the time to become prisoners of the old dogmas of the past," he told business leaders.

"All over the world, policy makers are leaving behind the solutions of yesterday and recognising that extraordinary times require extraordinary actions."

David Cameron, leader of the Conservative party, told the Sunday Times that Mr Brown would "get found out" for his economic policies, however.