Brown: Commissioned report

Cash Shortfall Threatens Spending Plans

Reports in the Sunday Times and Observer newspapers say that the National Audit Office (NAO) report, which is due to be published next week may question some assumptions made in the former Chancellor, Kenneth Clarke's Budget, last November.

The newspaper reports say that the NAO has focused on the assumptions made by the Treasury under the last Government about unemployment, economic growth and interest rates, which were used to forecast tax revenues and public spending.

It may in particular cast doubt on Mr Clarke's upward revision of the growth rate from 2.25% a year to 2.5%, and challenge the savings the last Government said could be made from a clampdown on fraud and tax evasion.

They suggest the report will give Chancellor Gordon Brown more ammunition to fight off spending ministers' demands for more money, and to put up some taxes in his July 2 Budget. It could also put the squeeze on some Government programmes.

Mr Brown commissioned the report last month.

A Treasury spokesman would say only that the NAO would report to the House of Commons "next week"