Our aim was to defeat the age-old British millstone of boom and bust, high growth followed by recession

Tony Blair

Cutting fuel tax would release so much money into the economy that interest rates would rise - and though many people might say they wanted cheaper fuel they also wanted cheaper mortgages, Mr Blair argued.

The prime minister said it was an issue of economic stability, a concept on which he focused during his speech at Northumbria University.

Economic revolution

Mr Blair rubbished suggestions that Labour had inherited a golden economic legacy on coming to power in 1997, saying that increasing fuel duty was one of the tough decisions that Chancellor Gordon Brown had to make.

The prime minister argued that Mr Brown had effected a economic revolution ending years of boom and bust.

He said: "People forget that in coming to office we introduced, literally, a revolution in economic management. Our aim was to defeat the age-old British millstone of boom and bust, high growth followed by recession."

Boom and bust in particular could be attributed to the Tories' economic management when they were in power, he said.

Blair says Tory rule means 'boom and bust'

Mr Blair argued that governments had to create the solid foundations of a good economy in order to achieve aims like full employment, rebuilding the NHS and ensuring that pensioners shared in the nation's prosperity.

In recent days government ministers have stressed that a cut in fuel duty would mean other priorities like raising pensions would have to take a back seat.

Returning to the theme, Mr Blair said that Britain's economic successes, that included having the lowest unemployment for 25 years, meant there was a large Treasury surplus.

But he said it would be irresponsible to flood a now stable economy with billions of pounds.

Priorities

Instead, in the name of stability, the government had to prioritise where the money it could spend would go.

People might well feel that the price of fuel was too high, but they should realise that compared to many European states, the overall tax burden in the UK was lower.

Mr Blair highlighted an Organisation for Economic Co-operation and Development report which he said showed Britain had lower taxes than any major industrialised country except Japan and the USA.

He said that now was "not the time to throw away" all the government had done in terms of bringing down the national debt, reducing unemployment and bringing economic stability.

"Now is not the time to return to boom and bust, or to make mortgages subject to political whim again, or to scrap the New Deal. That would not help Britain's hard-working families."

He said that when Mr Brown stood up to deliver his pre-Budget report next Wednesday, "long-term economic stability will come first, second and third because British families will come first, second and third."